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From the moment you receive your first paycheck, a portion of your earnings is quietly working behind the scenes to secure your future. In Malaysia, this comes in the form of the Employees Provident Fund (EPF), a trusted savings scheme that has been safeguarding the retirement dreams of millions since 1951. More than just a compulsory deduction, the EPF is a carefully structured system that transforms part of your salary into a reliable source of income for your golden years. In this article, we explore how this process works and why it matters for every working individual.
HOW YOUR CONTRIBUTIONS ARE DIVIDED
Each month, a portion of your salary is deducted for the Employees Provident Fund (EPF), with contributions made by both you and your employer. For employees under 60, you contribute 11% of your salary, while your employer contributes either 12% or 13% depending on your monthly wage (13% if RM5,000 or less, and 12% if above RM5,000). Once you reach 60, employee contributions stop, and the employer’s contribution rate reduces to 4%. Your total contributions are divided into three accounts:
PLANNING YOUR RETIREMENT WITH BELANJAWANKU & RIA FRAMEWORK
Saving is just one part of the equation, knowing how much you need to save is equally important. That’s why EPF offers tools like Belanjawanku, a detailed cost-of-living guide created with the Social Wellbeing Research Centre (SWRC). It helps members understand realistic monthly expenses based on different household types and lifestyles in Malaysia. Alongside Belanjawanku is the Retirement Income Adequacy (RIA) Framework, which breaks down savings goals into three tiers: Basic, Adequate, and Enhanced. based on your lifestyle needs. These tools empower you to plan smarter and set realistic targets to secure your financial future.
HOW YOUR EPF SAVINGS GROW?
Your EPF savings don’t just sit idle but they actively grow over time through annual dividends. Every year, EPF declares a dividend rate based on the fund’s investment performance across various asset classes such as equities, bonds, and real estate. These dividends are credited to your EPF accounts, boosting your total savings beyond your monthly contributions. Historically, EPF dividends have consistently outpaced inflation and outperformed many traditional savings options, making your retirement fund stronger over time. While earning more from dividends is important, you can also increase your savings through other ways:
VOLUNTARY CONTRIBUTION
You can increase your EPF savings anytime with voluntary contributions starting as low as RM10, up to RM100,000 per year. The sooner you start, the more you benefit from compounding, letting your savings grow exponentially over time. Starting today means building a more comfortable and financially secure retirement, turning small extra efforts now into big rewards in the future.
I-SARAAN
It is specially designed for members aged 60 and below who are self-employed or have irregular incomes. Through this scheme, you can voluntarily contribute to your EPF savings and receive a government incentive of 20% on your total contributions, up to RM500 per year and RM5,000 over your lifetime. Perfect for gig workers, i-Saraan requires no minimum contribution. Plus, members continue to earn annual dividends on their savings along with these government incentives.
I-SURI
For eligible housewives under 55 who are registered in the National Database on Poverty (e-Kasih), EPF offers the i-Suri scheme, a unique opportunity to build retirement savings even without formal employment. Under this programme, the government matches 50% of every RM1 you contribute, up to RM300 a year, with a lifetime cap of RM3,000. In 2023 alone, more than 42,000 members received a total of RM19 million in incentives. On top of these incentives, members also enjoy annual dividends and core EPF protections such as death and incapacitation coverage, ensuring financial security for the future.
WITHDRAWAL OPTIONS: START WAYS TO ACCESS YOUR EPF SAVINGS
EPF savings are designed to safeguard your retirement, but they also give you the flexibility to access your money when life requires it. Starting from 50 years old, individuals can make partial withdrawals from Account 2 to ease commitments or plan for early retirement. By the age of 55, your savings will be transferred into Account 55, providing an option for individuals to withdraw full or partial amounts, or enjoy a monthly pension payout scheme. If you choose to keep working, new contributions will go into the Gold Account (Akaun Emas), which can only be accessed at 60, when both Account 55 and the Gold Account are combined. For those under 55, the Flexible Account allows quick withdrawals starting from just RM50, providing a safety net during emergencies. Beyond that, EPF also offers special withdrawals for housing, education, medical needs, and Hajj for Muslim members.
With these options, EPF gives you the perfect balance of long-term security and short-term flexibility, making your savings truly work for you at every stage of life.
BEYOND SAVING: OTHER EPF BENEFITS YOU SHOULD KNOW
Your EPF is more than just a place to park your retirement money, it is a complete financial ecosystem designed to help you grow, protect, and maximise your wealth. Here are some of the lesser-known but highly valuable features every member should take advantage of.
i-INVEST: BOOST YOUR RETIREMENT WEALTH
If your Account 1 balance is higher than the basic savings amount set for your age, you have the option to invest up to 30% of the excess through i-Invest. Available via i-Akaun, this platform allows you to channel your funds into EPF-approved unit trust funds whether conventional or Shariah-compliant. with some of the lowest fees in the market, starting from just RM1,000. It’s a chance to diversify your portfolio, target potentially higher returns, and take an active role in building your retirement wealth, all while remaining within the security of EPF’s trusted framework.
TAX RELIEF & FREE FINANCIAL GUIDANCE
EPF savings enjoy attractive tax benefits and contributions are tax-deductible up to RM4,000 annually, while all dividends earned are completely tax-free. On top of that, members have access to EPF’s Relationship & Advisory Service (RA), which offers free personalised financial planning. This service helps you evaluate your goals, monitor your savings progress, and craft a practical retirement strategy tailored to your needs. With these advantages, EPF goes beyond being just a savings scheme and it becomes your trusted partner in building a secure and worry-free financial future.
Remember, the earlier you start saving and actively engage with your EPF savings, the greater the benefits you reap through compounding dividends and government incentives. With EPF’s trusted guidance and innovative solutions, millions of Malaysians are steadily building wealth that lasts a lifetime. Start today and turn your efforts into a future of financial confidence and peace of mind.
