EPF Contribution from 12% to 13%?

Effective from 1st January 2012, the EPF contribution from the employer to the employee for salaries below RM5,000 per month will be increased by 1%. This will bring the contribution rate by employers to 13% from 12%. The reason behind is that EPF is not enough for retirement for most people especially the low to middle income earners.


While employees are very happy with the new rules, many employers will be experiencing the extra financial burden. It leads to many concerns raised by them due to it’s unfair and irrational move during this economic condition.

How Does 1% Increase Affect You?

In my opinion, many employers can actually obtain more tax relief when contributing more in EPF. And, they will still have the freedom to do their financial adjustment for their employee. With the increase of 1% EPF contribution, they can actually try to lower the percentage of job increment for their employees. As a smart employer, they can do that as long as it’s not beyond the range of pay scale adjustment. For example, you may only get 5% increase of your salary, instead of getting 6% increment.

So, I will strongly suggest this move as EPF is a great source of financial support for the retirees. With the 1% increase in EPF contribution, it can either shorten the time duration for a middle income group to accumulate their wealth or enjoy more savings at their retirement age.

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