SOCSO vs. EPF: Differences and Why EIS Matters Too

Malaysia cares about the well-being of its workers, which is why the country has systems in place for workplace safety and retirement savings.

These come in the form of SOCSO, EPF, and EIS.

SOCSO protects employees from unexpected situations at work, such as accidents, illnesses, and long-term disabilities. EPF, on the other hand, focuses on helping employees save for retirement.

In addition, SOCSO also includes EIS, which provides temporary financial support for employees who lose their jobs due to layoffs.

As an employer, you need to understand these three systems to manage your responsibilities properly.

Don’t worry, we’ll explain everything in this article to make it easy to understand. Keep reading!

What are SOCSO and EPF?

Both SOCSO and EPF are part of Malaysia’s employment framework, designed to provide financial security to employees. However, they serve different purposes:

SOCSO (PERKESO): A social security scheme that offers protection against workplace injuries, illnesses, and long-term disability. It is managed by the Social Security Organisation (PERKESO) and helps employees and their families in case of unexpected events like workplace accidents or sudden disabilities.
EPF (KWSP): A retirement savings fund where both employers and employees contribute a portion of the employee’s salary every month. EPF helps employees save for their future, providing them with financial support after retirement.

Both contributions are mandatory for eligible employees, and employers must register and contribute on behalf of their staff.

Employees Provident Fund (EPF) Contribution

EPF is a long-term savings plan for employees, governed by the Employee Provident Fund Act 1991.

This fund is used to help workers build financial security after retirement.

When an employee works for a company, both the employer and the employee contribute a percentage of the salary to EPF.

These funds are then invested by EPF to generate returns and grow the employee’s savings over time.

Employer's and Employee's Contribution Rate for EPF

EPF contribution rates depend on the employee’s age and nationality:

Malaysians below 60 years old:
- Employers pay 13% (for salaries RM5,000 and below) or 12% (for salaries above RM5,000).
- Employees contribute 9% of their salary.
Malaysians aged 60 and above:
- Employers pay 4%, while employees do not need to contribute.
Permanent residents below 60 years old:
- Employers pay 13% or 12%, while employees pay 9%.
Foreign workers:
- Employers pay RM5, and employees contribute 9% of their salary.

When Should EPF Contribution be Paid?

Employers must pay EPF by the 15th of each month for the salary paid in the previous month.

If they miss the deadline, they may have to pay extra charges and penalties, which can increase costs.

EPF contributions are made every month, following the salary payment schedule.

Employers should keep track of salary payments to avoid delays and extra costs.

How to Make EPF Payment?

Employers can make EPF payments through:

The e-Caruman website or mobile app
Online banking
EPF counters nationwide
Bank agents (Maybank, RHB, Public Bank)

Social Security Organization (SOCSO) Contribution

SOCSO provides financial help if an employee gets injured at work or suffers from long-term disability. It also offers support to the employee’s family in case of work-related death.

There are two SOCSO schemes:

Employment Injury Scheme: Covers workplace accidents or injuries.
Invalidity Scheme: Provides support if an employee can’t work due to a serious medical condition (even if it is not caused by work).

Employer's and Employee's Contribution Rate for SOCSO

Similar to EPF, SOCSO contribution rates depend on the employee’s age and nationality with different rates:

Malaysians below 60 years old:
- Employers pay 1.75%, and employees pay 0.5%.
- Covers both the Employment Injury Scheme and the Invalidity Scheme.
Malaysians aged 60 and above:
- Employers pay 1.25%, and employees do not need to contribute.
- Covers only the Employment Injury Scheme.
Foreign workers:
- Employers pay 1.25%, and employees do not need to contribute.
- Foreign workers are only covered under the Employment Injury Scheme.

When Should SOCSO Contribution be Paid?

SOCSO contributions must be paid by the 15th of each month for the previous month's salary.

This means if an employee’s salary is for January, the SOCSO contribution must be made by February 15.

If employers fail to pay on time, SOCSO imposes a 6% penalty per year on the outstanding amount.

Delayed payments can increase costs and create compliance issues, so it’s important to process SOCSO contributions on schedule to avoid unnecessary charges.

How to Make SOCSO Payment?

You can pay SOCSO via various methods below:

PERKESO ASSIST Portal
Online banking
Cheque, money order, or postal order
Bank agents (Maybank, RHB, Public Bank)
SOCSO counters

Employment Insurance System (EIS) Contribution

The Employment Insurance System (EIS) helps employees who lose their jobs. It provides temporary financial support and job search assistance.

Employer's and Employee's Contribution Rate for EIS

Both employers and employees contribute 0.2% of the employee’s salary each month.

However, EIS only applies to employees earning RM4,000 or below.

This means for a worker earning RM3,000, both the employer and employee will contribute RM6 each, totaling RM12 per month towards EIS.

Though it may seem like a small amount, this contribution helps employees stay afloat during difficult times.

When Should EIS Contribution be Paid?

EIS contributions must be paid together with SOCSO contributions.

Employers do not need to make a separate transaction, as both payments follow the same schedule and deadlines.

Contributions must be made by the 15th of each month, covering the employee’s salary from the previous month.

Late payments may result in penalties and fines.

How to Make EIS Payment?

Since EIS is managed by SOCSO, employers can submit EIS contributions through the same payment channels used for SOCSO. Here’s how employers can make the payment:

PERKESO ASSIST Portal
Online banking
Cheque, money order, or postal order
Bank agents (Maybank, RHB, Public Bank)
SOCSO counters

Comparison Summary in Table: EPF vs SOCSO vs EIS

We already recap the comparison between EPF, SOCSO, and EIS in this table to make it easier for you to understand.

While EPF focuses on retirement savings, SOCSO protects employees from workplace risks, and EIS provides financial help for those who lose their jobs.

Employers must register employees for all three schemes and make monthly payments on time to comply with Malaysian employment laws.

Feature	EPF (KWSP)	SOCSO (PERKESO)	EIS (Employment Insurance System)
Purpose	Retirement savings	Workplace injury & disability protection	Financial support for unemployed workers
Who Must Contribute?	Malaysians, Permanent Residents, Some Foreign Workers	Malaysians, Permanent Residents, Foreign Workers (Employment Injury Scheme Only)	Malaysians & Permanent Residents aged 18-60
Employer’s Contribution	4% - 13% (varies by salary & age)	1.25% - 1.75% (varies by age)	0.2%
Employee’s Contribution	0% - 9%	0% - 0.5%	0.2%
What Does It Cover?	Retirement savings & withdrawals upon reaching retirement age	Work-related injuries, occupational diseases, disabilities, & survivor benefits	Temporary financial aid & job placement services for employees who lose their jobs
When to Pay?	By the 15th of each month	By the 15th of each month	Paid together with SOCSO contributions
Penalty for Late Payment	Fines and interest charges	6% annual penalty	Late charges similar to SOCSO
Payment Methods	e-Caruman, Bank Transfers, EPF Counters	ASSIST Portal, Bank Transfers, SOCSO Counters	Same methods as SOCSO payments
Who Administers It?	Employees Provident Fund (KWSP)	Social Security Organisation (PERKESO)	PERKESO

Reminder, employees perform better when they feel secure about their future.

Timely contributions to EPF, SOCSO, and EIS ensure that they have savings, medical protection, and financial support if they face job loss.

As an employer, fulfilling these obligations creates a more stable, productive, and engaged workforce. This can benefit both the employees and the business.

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