{"id":18707,"date":"2024-01-16T03:13:58","date_gmt":"2024-01-15T19:13:58","guid":{"rendered":"https:\/\/www.comparehero.my\/blog\/uncategorized\/what-is-epf-voluntary-contribution-and-how-does-it-work.html"},"modified":"2026-06-08T12:49:33","modified_gmt":"2026-06-08T04:49:33","slug":"what-is-epf-voluntary-contribution-and-how-does-it-work","status":"publish","type":"post","link":"https:\/\/www.comparehero.my\/blog\/finance-explained\/what-is-epf-voluntary-contribution-and-how-does-it-work.html","title":{"rendered":"What is EPF Voluntary Contribution and How Does it Work?"},"content":{"rendered":"\n

The Malaysian Employee Provident Fund (EPF) was established in 1951 as a compulsory savings plan for retirement<\/span><\/a>, especially for employees in the private sector.<\/p>\n

\"What_is_EPF_Voluntary_Contribution_and_How_Does_it_Work_-Infographic\"<\/p>\n

However, many decades later, our EPF contributions as a whole are not what they should be. Recent reports<\/span><\/a> have shown that only 4% of Malaysians are able to retire comfortably, by EPF\u2019s own calculations.<\/p>\n

The reasons for this are many, including withdrawals made during the Covid-19<\/span><\/a> pandemic for emergency use and stagnant salaries among locals, resulting in insufficient contributions.<\/p>\n

In addition to this having a negative effect on individuals, it also affects the economy as a whole. The nation will have to struggle with higher costs in sustaining retirees if a large majority have insufficient savings.<\/p>\n

That\u2019s why it\u2019s useful to know about EPF\u2019s voluntary contribution option<\/span>, which many are still not aware of. This program offers more flexibility for Malaysians to manage their savings, and can be an option for propping up one\u2019s retirement funds<\/span><\/a>.<\/p>\n

We\u2019ll look into this program in detail later on. First, we should understand what the EPF is in Malaysia.<\/p>\n

 <\/p>\n

How Does the EPF Work in Malaysia?<\/span><\/h2>\n

\"What_is_EPF_Voluntary_Contribution_and_How_Does_it_Work_-01\"<\/span><\/p>\n

The Employee\u2019s Provident Fund was set up in 1951, with the passing of the Employee\u2019s Provident Fund Ordinance 1951. It was meant to be a social security scheme to provide retirement benefits to its members for added financial security. In Malay, the EPF is known as Kumpulan Wang Simpanan <\/p>\n

As of 2024, EPF Malaysia<\/span> covers more than 15 millions members, managing contributions worth over RM800 billion. <\/p>\n

When the EPF began, it started with mandatory contributions. Employees were required to contribute a portion of their gross income (currently 11%) and employers would top up an additional 12-13% of their employee\u2019s salary. <\/p>\n

If you\u2019re employed, this will be handled by your administrative department. You\u2019ll see this reflected in your payslip as a deduction of your gross salary.<\/p>\n

The EPF manages all contributions like an investment fund. In simple terms, they invest our collective EPF contribution in various businesses, equity funds, properties and the like. This generates a profit, which is paid out yearly to members. It is usually announced as a percentage of your contributions, which varies from year to year.<\/p>\n

Upon reaching the age of 55 and 60, members are allowed to withdraw their contributions lump sum plus the dividends earned. Withdrawals for other reasons<\/span><\/a>, like education and property purchases are also allowed before you reach the stated age.. <\/p>\n

With the changing nature of employment and income generation in Malaysia, EPF has begun introducing voluntary contribution options as well.<\/p>\n

 <\/p>\n

How Does EPF Voluntary Contribution Work?<\/span><\/h2>\n

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In addition to Mandatory Contributions made by both employers and employees, members are given several options to make voluntary contributions. These have been introduced to include those who are not in a conventional employment arrangement, are self-employed or simply want to add to their EPF savings<\/span><\/a>.<\/p>\n

 <\/p>\n

There are currently four<\/strong> EPF Voluntary Contribution programs:<\/p>\n

 <\/p>\n

1. Self-Contribution<\/span><\/h3>\n

<\/span>This self-contribution program is meant for those not covered under the EPF Act 1991. Basically, this includes those not employed under a conventional employee-employer arrangement. For instance, those who are self-employed, run their own business, or are freelancers.<\/span><\/p>\n

<\/span>This is also useful for remote workers whose employers are located overseas. In cases like these, foreign employers usually don\u2019t make an EPF contribution in Malaysia for you, so you can consider this option and contribute on your own initiative.<\/span><\/p>\n

<\/span>Self-contribution can also be made by those who have previously been employed but now are working outside the mandatory contribution system.<\/span><\/p>\n

<\/span>Who can apply:<\/span><\/p>\n
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