Malaysia keeps EPF employee contribution rate below 11%

Malaysia's 929.6 billion ringgit ($228.3 billion) Employees Provident Fund, Kuala Lumpur, will extend reductions in employees' statutory contribution rate through 2021 to help its more than 14 million participants cope with the coronavirus fallout.

A reduction in contribution was introduced this year at the height of the global economic uncertainty resulting from the COVID-19 pandemic.

Employees' share of the system's statutory contribution rate will be reduced to 9% of their monthly salaries from 11% for January through December 2021, a Nov. 28 news release said.

"Members who wish to maintain the contribution rate" at 11% may apply to do so, it said.

The 9% rate for 2021 will actually be an increase from the 7% contribution rate the EPF put in place in late February as an economic emergency measure for the period between April and December this year.

The announcement is the EPF's second in less than two weeks allowing members in the nationwide defined contribution plan, the backbone of Malaysia's retirement system, to tap their retirement savings as a means of getting through COVID-19-related economic turbulence.

On Nov. 16, the EPF unveiled its new "i-SINAR" facility allowing an estimated 2 million participants who've lost their jobs this year, been put on "no pay leave" or who have no other sources of income to access as much as 14 billion ringgit in retirement savings from their main EPF accounts — account 1 — during the first half of 2021.

Under the existing i-Lestari program put in place early this year, participants can withdraw as much as 500 ringgit a month through March 2021 from savings in account 2, which draws 30% of combined monthly contributions made by employees and their employers.

Account 2 is designed to be available for a variety of needs, from education to medical care. Account 1, which takes in 70% of combined contributions, is usually meant to be used strictly to accumulate savings for retirement.