What Is EPF and How Does It Work?

Understand your rights as a Malaysian employee by starting with the basics. Don’t know what EPF is but too shy to ask? Get started here.

By Matt Khoo on 2023-11-27 at 7:12 AM

Updated on 2025-01-28 at 7:47 AM

If you’ve ever wondered, “What exactly is EPF, and how does it work?” – you’re not alone! 

Understanding the Employees Provident Fund (EPF) is crucial for anyone working in Malaysia, especially when planning for a secure financial future. Don’t worry, asking these questions is the first step to becoming financially savvy.


What Is EPF?

The Employees Provident Fund (EPF) is a retirement savings scheme designed to help Malaysians save for their post-retirement years. Both employers and employees contribute to this fund monthly, ensuring that workers have a financial cushion when they retire.


How Does EPF Work?

When you’re employed, a portion of your salary (a minimum of 11% for employees under 60) is deducted each month and matched by your employer’s contribution (a minimum of 12% for employees under 60). These contributions are then invested and earn dividends annually, helping your savings grow over time.

Your EPF account is divided into two sections:

  1. Account 1 (70%): Primarily for retirement.
  2. Account 2 (30%): Can be used for specific purposes like purchasing a home, medical needs, or funding education.

Minimum Contribution Rates for EPF

As of recent guidelines:

  • Employees below 60 contribute 11% of their monthly salary, while employers contribute 12%.
  • Employees aged 60 and above contribute 0%, with employers contributing 4%.
  • Optional contribution rates may apply under certain circumstances.

When Can You Withdraw Your EPF?

Your EPF savings are typically accessible upon:

  1. Retirement: At age 55 or 60, depending on the account type.
  2. Early Withdrawal: For specific needs like medical bills, education, or buying a house.
  3. Full Withdrawal: If you’re leaving the country permanently or upon passing (in which case, it goes to your beneficiaries).

 

For more information on EPF and to register as a member, log on to KWSP.gov.my.


Learn More About Employee Benefits and Rights


Understanding your EPF is just one step toward securing a brighter future. With Hiredly, you can discover opportunities at companies that value employee well-being and growth. Join our Young Leaders Community for peer-to-peer learning and networking, or explore tailored career options by taking the Work Personality Test. Together, these tools can help you unlock your potential and thrive in a workplace where you truly belong.

By Matt Khoo on 2023-11-27 at 7:12 AM