The minimum employee contribution rate for the Employees Provident Fund (EPF) will be set at 9%, starting from January 2021 for a period of 12 months. The announcement was made by Finance Minister Tengku Zafrul Aziz today during the tabling of Budget 2021.
Previously, the statutory employee contribution rate was set at 11% for EPF members below the age of 60. Then, in February of this year, this rate was reduced to 7% for the duration of 1 April to 31 December 2020 as part of the Economic Stimulus Package. Thus, come January of next year, EPF contributors will be contributing more than the current 7% rate, but less than the 11% that was set before.
According to the finance minister, this initiative is introduced to increase the take-home pay of EPF members. The value of this initiative is estimated to be about RM9.3 billion.
In addition to the change in contribution rate, Tengku Zafrul Aziz also announced that the government will be allowing targeted EPF members to withdraw funds from their EPF Akaun 1 next year.