Kumpulan Wang Simpanan Pekerja (KWSP), also known as the Employees Provident Fund (EPF), is Malaysia’s national retirement savings scheme. It is designed to help employees in the private and non-pensionable public sectors save for their retirement. It is regulated by the Employees Provident Fund Act 1991 and overseen by the EPF Board.

Kumpulan Wang Simpanan Pekerja

Key Features of KWSP

  1. Retirement Savings: Both employers and employees contribute monthly to the employee’s EPF account.
  2. Dividends: The funds are invested, and contributors earn annual dividends declared by the EPF.
  3. Withdrawal Options: Members can withdraw funds for purposes such as retirement, housing, education, medical expenses, or at age 55, 60, or upon incapacitation.
  4. Shariah-compliant Option: Members can opt for a Shariah-compliant savings scheme.

Employer’s Obligations for KWSP

Employers have specific legal responsibilities regarding their employees’ EPF contributions:

1. Registering with the EPF

  • Employers must register with the EPF upon hiring employees and open an EPF account for each employee.

2. Contributions

  • Both employer and employee contributions are mandatory and based on a percentage of the employee’s monthly wages.
    • Employee Contribution: Typically 11% of their salary (subject to statutory changes).
    • Employer Contribution: Varies but generally starts at 12% or 13% of the employee’s monthly wages (depending on the employee’s income level).
  • Contributions are calculated based on the employee’s total wages, which include salary, allowances, bonuses, commissions, and other benefits.

3. Payment Timeline

  • Employers must make EPF contributions before the 15th of the following month.
  • Late or non-payment can result in penalties and legal action.

4. Submission of Records

  • Employers must submit the EPF Form A with details of contributions for each employee every month. This is typically done online via the i-Akaun system.

5. Providing Payslips

  • Employers are required to provide payslips that clearly show deductions made for the EPF.

6. Compliance with Rate Changes

  • Employers must adjust contributions when the EPF announces changes to rates, such as during government initiatives or budget updates.

7. Penalties for Non-compliance

  • Non-payment, late payment, or inaccurate submissions can result in:
    • Fines: Up to RM10,000 per offense.
    • Imprisonment: For severe breaches.
    • Interest Charges: On overdue payments.

Voluntary Contributions

Employers may contribute above the statutory rate, which can serve as an additional benefit for employees. Employees also have the option to voluntarily contribute more.

Why Compliance Matters

Failure to comply with EPF regulations not only results in legal penalties but can also damage the employer’s reputation and employee trust. Ensuring timely and accurate contributions helps employees secure their financial future.

Employer’s statutory obligations