This is one of two recent initiatives introduced by EPF to ease employers' financial constraints. The second is pay-for-reduction, through which employers are offered a reduction on their outstanding late payment charges. More information here.
Malaysia's Employees Provident Fund (Kumpulan Wang Simpanan Pekerja/EPF) has this week launched two initiatives targeting employers, to ease the management of their cash flow during the pandemic while allowing them to undertake their statutory obligation.
Through the first initiative, which is an exemption on late payment charges, employers are given flexibility on the payment period for their current mandatory contribution. As for the second initiative, the Employer Pay for Reduction initiative (e-PaR), employers are offered a reduction on their outstanding late payment charges.
Per EPF's statement, the exemption on late payment charges initiative refers to the charges imposed on employers who fail to remit their EPF mandatory contributions by the 15th of every month. While the mandatory contribution date of the 15th of every month remains in effect, employers can now remit their contribution payments until the end of every month without incurring any late payment charges.
This initiative, it noted, allows the flexibility for employers to manage their cash flow effectively during this challenging time. Employers do not need to apply for this initiative as it has taken effect since 13 September (the date of the announcement), starting with contributions for September 2021 until December 2021.
Meanwhile, the e-PaR initiative offers employers up to 70% reduction on outstanding late payment charges imposed for any period prior to August 2021. To be eligible for this reduction, employers must ensure that any outstanding contribution payments and dividends for their employees for the periods before August 2021 have been paid in full before 31 December 2021.
The EPF shared: "The significant reduction in late payment charges is aimed at assisting employers in managing their cash flows and to provide them the opportunity to settle any outstanding contribution payments."
Applications for e-PaR will open from 13 September 2021 until 31 December 2021.
"The EPF is cognisant of the financial challenges that local businesses are facing during the imposed movement restrictions period. The two initiatives are expected to help mitigate impacts of the pandemic on business operations as well as ensure employers continue to contribute towards their workers’ retirement savings."
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