EPF Will Align Employer & Employee Contribution with the New Minimum Wage Order
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Starting 1st January 2019, the minimum contribution for employees and employers will be aligned with the Minimum Wages Order (Amendment) 2018. This is confirmed by the Employees Provident Fund (EPF). The minimum wage of RM1,100 are set for all parts of Malaysia including Sabah and Sarawak.
In a statement, the EPF stated that with new measure is set, the expected monthly contribution to be received by the EPF for every employee who earns monthly wages will be no more than a minimum of RM264, subject to the employee being employed for the full month. Members who are salaried on a weekly, daily or hourly basis will have a different minimum contribution.
The EPF added that notices had been delivered to all registered employers on this matter. All registered employers would work closely with the EPF for smooth implementation of the policy.
Insufficient funds
Tunku Alizakri Alias, EPF’s chief executive officer, said: “Low wages, particularly among low-income earners, is one of the primary causes that many Malaysian workers retire with insufficient funds. Alignment of the minimum wage should help EPF members achieve sufficient savings for their retirement and help strengthen their future financial resilience.”
As of now, a total of 1.64 million (out of 7.11 million) active EPF members contributed less than the current minimum wage of RM1,000. The low monthly contribution is likely to cause lower retirement savings for EPF members.
Tunku Alizakri said that low salaries was one of the main reasons why many Malaysians retired with insufficient funds. Pic credit: NST
EPF statistics also show that 64% of its members who have reached age 54 years have savings below RM50,000, which is a very low amount when taking into account the household debt and the rising cost of living.
EPF’s CEO also said “With the proven success of EPF’s Retirement Advisory Services for members, the provident fund will be providing free retirement advisory services for employers, including having dedicated officers to manage the employers’ relationship with EPF.”
On November 28th, the EPF increased the minimum basic savings target for retirement at age 55 to RM240,000, effective January 1st.
For more information, you may call the EPF Contact Management Centre at 03-89226000, visit the EPF website at www.kwsp.gov.my or visit any of the 67 EPF branches nationwide.
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