A contribution is the amount of money paid to the EPF which is calculated based on the monthly wages of an employee, and then credited into the employee's EPF account. The EPF contributions for each employee are made up of the employee's and employer's portions.

The employee's share is deducted from the employee's wages and contributed to the EPF. The employer's share is the amount of money contributed by the employer to match the employee's share of contribution for the employee's retirement benefit.

EPF contributions can be paid in cash, by postal order, bank draft or any other means approved by the Board. They must be paid to the nearest ringgit at the rate specified in the Third Schedule of the EPF Act 1991.

Contribution Rates
The rate of contribution is a percentage of the employee's monthly wages that must be paid as EPF contribution. Each employee is required to contribute 8 percent of his/his monthly income, and this is added by the employer's contribution of 12 percent. The rates of employee's and employer's share of contribution are subject to changes set by the Government. In order to facilitate the payment of contributions, the amounts payable are provided in the Third Schedule of the EPF Act 1991.

Both the employee and employer, or either of them, may also opt to contribute at rates higher that what is required.

See: Third Schedule of the EPF Act 1991

Payments Liable For EPF Contribution

Generally, all remuneration due to an employee is wages and shall be subject to the EPF contributions. Examples of such payments include:

• Salary
• Payment for unutilised leave;
• Bonuses;
• Allowances;
• Commission;
• Arrears of wages;
• Wages for maternity leave;
• Wages for study leave;
• Wages for half pay leave; and
• Directors' salary (as an employee).

Note: The above list is not exhaustive. If you have any doubts, please contact our Call Management Centre at 03-89226000, Enquiry or any EPF Office.

Payments Not Liable For EPF Contribution

List of Payments which do not form part of the definition of “Wages” and shall not subject to the EPF contributions  include:

• Service charges;
• Overtime payment;
• Gratuity;
• Directors' fee;
• Retirement benefits;
• Payment in lieu of notice of termination of employment;
• Retrenchment, temporary and lay-off termination benefits; and
• Any travelling allowance or the value of any travelling concession.