Understanding EPF Contribution Rates: Employee vs Employer

Every month, a portion of your salary is channelled into your EPF account. But the contribution isn't just from you — your employer also contributes. Understanding the exact rates helps you plan better and take advantage of available benefits.

Current Mandatory Contribution Rates

As of 2024, the standard EPF contribution rates are:

Component	Monthly Salary ≤ RM 5,000	Monthly Salary > RM 5,000
Employee	11%	11%
Employer	13%	12%

This means if you earn RM 4,000/month, your total monthly EPF contribution is:

• Employee: RM 440 (11%)
• Employer: RM 520 (13%)
• Total: RM 960/month flowing into your EPF

The employer's higher rate of 13% for salaries at or below RM 5,000 is designed to help lower-income earners build their retirement savings faster.

How Contributions Are Split Between Accounts

Your total contribution (employee + employer) is allocated as follows:

• Akaun 1 (Account 1): 70% — strictly for retirement
• Akaun 2 (Account 2): 30% — withdrawable for housing, education, health

Using the RM 4,000 salary example, that's RM 672/month into Akaun 1 and RM 288/month into Akaun 2.

Optional Reduced Employee Rate

Employees have the option to reduce their contribution rate to as low as 0% by submitting a KWSP 17A (Khas 2021) form. While this puts more cash in your pocket today, it significantly reduces your retirement balance over time. This option should be used with extreme caution.

Voluntary Contributions: i-Saraan

If you're self-employed, a freelancer, or a gig worker not covered by mandatory EPF contributions, the i-Saraan programme lets you contribute voluntarily up to RM 60,000 per year. The government provides a matching incentive of 15% of your annual contribution, capped at RM 250/year.

Even if you're already a salaried employee, you can make additional voluntary contributions to boost your balance through self-contribution.

Tax Relief Benefits

EPF contributions qualify for tax relief under Section 49 of the Income Tax Act:

• Mandatory employee contributions: Up to RM 4,000 tax relief per year
• Voluntary/additional contributions: May qualify under the same or lifestyle relief categories

For someone in the 24% tax bracket, maximising this relief saves up to RM 960/year in taxes — essentially free money on top of your EPF dividends.

Why This Matters

Many Malaysians don't realise how much their employer contributes or that they can top up beyond the mandatory rate. A small voluntary increase of even 1–2% of your salary can translate into tens of thousands of extra ringgit at retirement thanks to decades of compounding.

---

Next step: Estimate your projected balance with our EPF calculator — see how contributions today become retirement income tomorrow.