As part of the 2020 Economic Stimulus Package announced by interim Prime Minister Tun Dr Mahathir Mohamad, the statutory employee contribution for the Employees Provident Fund (EPF) has been reduced to 7% per month.
Currently, the statutory contribution rate for employees is 11% for EPF members below age 60, and 5.5% for those aged 60 and above. While the contribution for members above 60 years old will remain at 5.5%, members below 60 will effectively have 4% more cash on hand each month.
Designed to encourage domestic consumption, the 4% reduction in employee contribution will see EPF members have a cumulative RM10 billion to use until the rate reverts to 11% in 2021. This 7% contribution rate will be in effect from 1 April 2020 until 31 December 2020.