EPF Employee Contribution Rate Revert to 11%, Good or Bad?

Before that, our government allow employee to reduce their EPF contribution from 11% to 8%. However, start from this month, the EPF employee contribution rate will back to normal which is 11% while their employer’s contribution rate still remains at 12% of your monthly wages. Thus, you can now enjoy total of 23% EPF contribution of your monthly wages.


Our government can make such decision due to the recovery from bad economy which you can see from different sector such as banking, employment and production.

I will strongly agree with the move as you can have huge benefits from the big picture. The reduction of EPF contribution rate will increase the employee’s disposable income and this will increase their spending as well. In the other words, they are spending their future money instead. Subsequently, they will less money for retirement. Not only that, you will also need to pay more income tax as you have higher income.

Why Our Government Increase the Rate from 8% to 11%?

In my opinion, our government can take action to increase the rate from 8% to 11% has several reasons. There are:

i. Reduce inflationary pressure by reducing spending power by the public
– Just imagine yourself, if the 1% is flowed into the consumers pocket, then there will be more money will flow into the market, probably billions of ringgits is freed up every month. This will boost inflation as well.

ii. Government needs more money to finance our economy for the coming years

iii. EPF needs more money to finance some of the equity financing such as Plus Expressways Bhd, and etc.

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