Retiree Finds RM320,000 Extra in EPF & Foreign Workers’ 2% Rule

KUALA LUMPUR, March 26, 2025 – The Employees Provident Fund (EPF) has become a hot topic in Malaysia, affecting both workers and employers.

A recent RM320,000 error in Sarawak has raised concerns, while new epf contribution rules for foreign workers could impact businesses.

Here’s what’s happening and how it could impact you.

Sarawak Retiree Shocked by Extra RM320,000 on His EPF Account

Imagine checking your EPF account and finding an extra RM320,000.

That’s what happened to a retiree in Sarawak on March 16, 2025.

At first, they thought it was a mistake, but the money stayed for a few days as he reported to See Hua Daily News.

A friend had a similar experience, seeing RM150,000 appear and then disappear.

After visiting an EPF branch, the retiree was told it was a system error from a recent upgrade.

The official EPF statement showed the correct balance, but the retiree still felt uneasy.

This raises a question for employers: If retirees are seeing errors, could your employees’ contributions be affected?

EPF has yet to issue an official statement, but this serves as a reminder to check your EPF account regularly.

New EPF Rule: Foreign Workers Must Contribute 2%

Starting February 3, 2025, all foreign workers in Malaysia must contribute 2% of their salary to EPF.

Employers must match this with another 2%. This law was officially passed on March 24, 2025.

Why the Change?

The government wants to provide foreign workers with a retirement fund and promote fair hiring practices.

Finance Minister Amir Hamzah Azizan believes this will encourage more local hiring and support Malaysia’s goal of becoming a high-income nation.

Employers Are Concerned

Business owners worry about rising costs. The Federation of Malaysian Manufacturers (FMM) is asking for a one-year delay, saying companies are already struggling with:

A 14.2% increase in electricity tariffs in July 2025
A minimum wage hike to RM1,700
Now, additional EPF costs for foreign workers

FMM President Soh Thian Lai said, "Businesses need time to adjust. We’re facing too many cost increases at once."

How the 2% EPF Contribution Affects SMEs

For small and medium enterprises (SMEs) that hire foreginers, even a 2% contribution can add up.

Here’s an example:

If you have 50 foreign workers earning RM2,000 each, that’s RM100,000 in monthly wages.
With a 2% EPF contribution, you’ll pay RM2,000 extra per month, or RM24,000 per year.
Employees will also contribute RM24,000 from their salaries, making the total EPF payment RM48,000 per year.

SMEs Struggle with Extra Costs

Industries that rely on foreign workers, such as construction, food & beverage (F&B), and plantations, will feel the biggest impact.

Economist Zulhazmi Abdul Rashid from UniKL Business School warns that SMEs might:

Increase product prices to cover costs
Hire illegal workers to avoid extra expenses, risking fines and shutdowns

Is the Impact Overstated?

Some experts say the effect will be small. Economist Geoffrey Williams believes the new rule will add about RM800 million to EPF, which is only 0.64% of total funds.

However, for SMEs already struggling with rising costs, every extra ringgit counts.

Will This Encourage Employers to Hire More Malaysians?

With the added cost of hiring foreign workers, some businesses may prefer hiring locals.

Employers already pay 12-13% EPF contributions for Malaysian employees, making the cost difference between locals and foreigners smaller.

A spokesperson from the Labour Ministry said, "This could reduce dependence on foreign workers and encourage businesses to follow hiring regulations."

Another key point: Only registered foreign workers qualify for EPF. Businesses hiring undocumented workers may face penalties.

With over 6 million Malaysians actively job-seeking on platforms like Maukerja and Ricebowl, now might be the best time to focus on local talent.

What’s Next for Employers?

Businesses are calling for clearer guidelines on how this will affect their costs and future policies.

The Federation of Malaysian Manufacturers (FMM) wants answers on:

How this will impact SOCSO contributions
Whether the 2% rate will remain fixed
Possible delays or adjustments to the new rule

For now, employers should:

Adjust budgets to include the new costs
Inform foreign workers about their 2% salary deduction
Monitor EPF updates for any new developments

Source:

FAQs: Quick Answers on EPF Updates

1. What is the Employees Provident Fund (EPF)?

EPF is Malaysia’s retirement savings scheme. Employers and employees contribute monthly—now including foreign workers at 2% each.

2. Why did an EPF account show an extra RM320,000?

A system glitch in March 2025 caused it. EPF says it was a display error, and official statements show the correct balance.

3. How does the 2% EPF rule affect my business?

You must pay 2% of each foreign worker’s salary, and they must also contribute 2%. For 50 workers earning RM2,000 each, this adds RM24,000 in extra costs per year.

4. Can the new EPF contribution be delayed?

The FMM is requesting a one-year delay, but the government has not confirmed any changes. Businesses should prepare for the new rule to take effect.

5. Where can I find local workers to hire?

Job platforms like Maukerja and Ricebowl have over 6 million Malaysians looking for jobs. This could be a good time to focus on hiring local talent.

Need to hire the right talent?

If you’re hiring, post your jobs on Maukerja or Ricebowl—with over 6 million jobseekers in Malaysia, your next top talent is waiting!