6 Mar - 2 min read
Come April till December 2020, the statutory employee contribution rate for the Employees Provident Fund (EPF) will be reduced from 11% to 7%. This means that you’ll find yourself with a bit more money to spend, but at the same time, less savings in your EPF.
However, you do have the option to keep your contribution rate at 11% if you want to. According to the EPF, you will need to complete and submit Borang KWSP17A (Khas 2020) to the EPF via your employer, and your contribution rate will not be adjusted to 7%. That said, the form has yet to be released, and will only be made available at a later date.
1.KWSP menjelaskan bahawa kadar caruman berkanun syer pekerja baharu ini akan berkuatkuasa mulai upah pekerja bulan April 2020 (caruman Mei 2020) sehingga upah pekerja bulan Disember 2020 (caruman Januari 2021), tertakluk kepada Jadual Ketiga Akta KWSP 1991.
— KWSPMalaysia (@KWSPMalaysia) March 5, 2020
The EPF also adds that the special form is specifically for the contribution rate revision as part of the Economic Stimulus Plan 2020. It means you should not submit the existing Borang KWSP17A (AHL), which lets EPF members apply for a permanent increase in their contribution rate until you submit a separate form – Borang KWSP18A (AHL) – to cancel it. It is meant for those who want to contribute more than the customary 11% statutory contribution rate.
The reduction in contribution rate this time round is intended to encourage domestic consumption, and was announced as part of the Economic Stimulus Package 2020. According to the EPF, it will affect your wages for April 2020 (contribution for May 2020) until December 2020 (contribution for January 2021).
The new statutory contribution rate will only apply to those below 60 years of age who are liable for contribution. It remains unchanged for employees aged 60 and above.
(Source: EPF (Twitter))
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