30th November 2020 - 2 min read
The Employees Provident Fund (EPF) has announced that employees who wish to maintain their statutory contribution rate at 11% instead of 9% in 2021 will be able to apply to do so starting from 1 December 2020.
“Members who wish to maintain the contribution rate for employees at 11% may fill in the Borang KWSP 17A (Khas 2021), which will be made available on the EPF website starting 1 December 2020,” said the provident fund in a statement.
Subsequently, employees must submit their completed forms to their respective employers for online registration via the i-Akaun (Employer) portal. These registrations by the employers are slated to begin on 14 December 2020, and they must also keep the forms received for record purposes.
The provident fund further clarified that the reduced statutory contribution rate of 9% will only affect employees below 60 years of age. The rate for those aged 60 and above will remain unchanged. According to the EPF, the new rate will come into effect starting from January 2021 (contribution for February 2021) until December 2021 (contribution for January 2022).
This move to set the minimum employee contribution rate at 9% was announced by Finance Minister Tengku Zafrul Abdul Aziz during the tabling of Budget 2021. According to the minister, it was meant to provide EPF members with access to more available cash, enabling them to pull through the financial difficulties brought on by Covid-19. It is expected to free up a cashflow of up to RM9.3 billion.
Prior to these changes, the statutory employee contribution rate was set at 11% for members below the age of 60. In February 2020, the government temporarily reduced it to 7% (April to December 2020) as one of the initiatives under the first economic stimulus package, although members could also opt out from the reduction by completing a form then.
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world