EPF Contribution Rate Malaysia 2026: Employer & Employee Guide

PUBLISHED: Oct 19, 2026UPDATED: Oct 19, 202610 min read
EPF Contribution Rate Malaysia Employer & Employee Guide

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Most Malaysian employees still pay 11% of their wages into EPF in 2026, and employers add 12% or 13% on top. The headline rates haven’t changed, but some of the rules around them have. Foreign workers now contribute, and the Third Schedule still decides the exact amount for most salaries.

This guide covers the rates for each type of employee, what counts as wages, deadlines and penalties, and how contributions grow once they reach an employee’s account.

What is the EPF Contribution Rate in 2026?

The rate depends on three things: the employee’s age, their citizenship or residency status, and whether their monthly wages sit above or below RM5,000. These are the current rates under the Third Schedule of the EPF Act 1991.

Employee category Monthly wages Employee share Employer share Total
Malaysian or PR, below 60 RM5,000 and below 11% 13% 24%
Malaysian or PR, below 60 Above RM5,000 11% 12% 23%
Malaysian, 60 and above Any amount 0% 4% 4%
PR, 60 and above RM5,000 and below 5.5% 6.5% 12%
PR, 60 and above Above RM5,000 5.5% 6% 11.5%
Non-Malaysian employee Any amount 2% 2% 4%
The higher 13% employer rate helps lower earners build more retirement savings without reducing their take-home pay.

The employer’s share is a separate cost on top of salary. It can never be deducted from the employees’ wages.

Also check: What is EPF? A Guide for Employees and Employers

What Changes When an Employee Turns 60?

For Malaysian citizens, the employee’s share drops to zero and the employer pays a flat 4%, whatever the salary. This structure has been in place since January 2019, when Budget 2019 cut the rates to lift take-home pay for people who keep working past 60.

A few practical points payroll teams often miss:

  • The new rate kicks in from the wage month after the employee’s 60th birthday, not the birthday month itself.
  • Employees aged 60 and above can still choose to keep contributing their own share voluntarily.
  • Mandatory contributions continue up to age 75, so rehired retirees still need EPF processed.
Permanent residents are treated differently. Their rates are roughly halved rather than removed, as the table above shows. 
Read also: How EPF Self/Voluntary Contribution Works in Malaysia

How Does EPF Work for Permanent Residents and Foreign Workers?

Permanent residents below 60 pay exactly what Malaysians pay: 11% from the employee and 12% or 13% from the employer. The difference starts at 60, when PRs move to 5.5% and 6.5% (or 6% above RM5,000).

Foreign workers are the bigger change. EPF used to be optional for most non-Malaysian employees, but it became mandatory from October 2025 wages under a scheme announced in Budget 2025:

  • Both employer and employee contribute 2% of monthly wages, for a total of 4%.
  • The rate is the same across all ages and wage levels.
  • It’s calculated as a straight percentage, not from the Third Schedule’s wage bands, with any sen rounded up to the next ringgit.
  • Non-citizens who became EPF members before 1 August 1998 stay on an older schedule, so check each worker’s membership history before setting a rate.

If your payroll hasn’t been updated for foreign staff since mid-2025, start there.

Read in Detail: EPF for Foreign Workers Malaysia: Are You Calculating It Right?

Which Payments Count as Wages For EPF?

EPF isn’t based on basic salary alone or on full gross pay. The EPF Act 1991 defines what counts as wages, and each payslip item needs to be checked against it.

Subject to EPF Not subject to EPF
Salary and wages Overtime pay
Bonuses Gratuity
Commissions and incentives Retirement benefits
Fixed allowances Retrenchment, termination or lay-off benefits
Salary arrears Payment in lieu of notice
Payment for unused annual or medical leave Travelling allowance
Paid maternity and study leave Reimbursements for work expenses
EPF’s own list of exclusions isn’t exhaustive, so unusual payments are worth checking against current KWSP guidance.

Travel claims often cause errors when reimbursements are mixed in with allowances. Running them through a dedicated claims management software keeps them separate from salary and out of the EPF wage figure.

Also check: EPF Contribution Table Malaysia 2026: Rates & Guide

Should You Use the Percentage or the Third Schedule?

For wages up to RM20,000, use the Third Schedule. It groups wages into bands (RM20 wide for most salaries) and sets a fixed contribution for each band, so the result often differs from multiplying salary by 11% or 13%.

Take a Malaysian employee under 60 earning RM3,250. That salary falls in the RM3,240.01 to RM3,260 band:

Method Employee Employer Total
Straight percentage RM357.50 RM422.50 RM780.00
Third Schedule (correct) RM359 RM424 RM783

A RM3 difference seems small, but across 200 staff over 12 months it adds up to an underpayment KWSP can claim back with late charges.

Above RM20,000, the schedule stops and you calculate the percentage directly. On RM21,250, the employee pays RM2,337.50 and the employer RM2,550. The total of RM4,887.50 is then rounded up to RM4,888, since EPF only accepts whole ringgit.

When is EPF Due and What Happens If You Pay Late?

Contributions for one month’s wages must reach KWSP by the 15th of the following month. January wages are due by 15 February, and so on. If the 15th lands on a weekend or public holiday, paying on the next working day won’t trigger a late charge.

Other deadlines to note:

  • Registering as an employer: within 7 days of hiring your first employee. One employee is enough to make you liable.
  • Notifying EPF when you stop employing anyone: within 30 days.
  • Paying: through i-Akaun (Majikan) and e-Caruman, using FPX or direct debit.

If you pay after the 15th, KWSP can impose a late payment charge on the outstanding amount, and you may also have to cover the dividends the employee lost while the money sat with you.

Persistent non-payment is a criminal matter. Under Section 43(2) of the EPF Act 1991, an employer can face a fine of up to RM10,000, up to three years in prison, or both. Under Section 46, company directors can also be held personally liable for unpaid contributions.

Read also: Employees Provident Fund (EPF) in Malaysia

Can You Contribute More Than the Minimum?

Yes, through EPF’s i-Topup facility (previously called Voluntary Excess), the employee, the employer or both can raise their share above the legal minimum. Once set up, the higher rate keeps running until someone formally cancels it.

Why employers do it:

  • Contributions up to 19% of an employee’s remuneration are tax-deductible for the company.
  • A higher employer rate, such as 15% or 16%, helps retain staff.

Why employees do it:

  • Mandatory and voluntary EPF contributions qualify for up to RM4,000 in personal tax relief, with a further RM3,000 available under the combined life insurance and voluntary EPF category.
  • EPF dividends and withdrawals are tax-exempt.
  • Members can add up to RM100,000 a year in voluntary contributions on top of payroll deductions.

Any extra amount should go through i-Topup. Over-deducting by mistake is a payroll error, not a voluntary contribution.

How is Each Contribution Split Across the Three Accounts?

Since 11 May 2024, every contribution is divided three ways instead of the old 70:30 split. Employers don’t need to do anything differently: you still remit one lump sum, and EPF handles the allocation.

Using the RM783 total from the RM3,250 example above:

Account Share From RM783 What it’s for
Akaun Persaraan 75% RM587.25 Retirement, locked until age 55
Akaun Sejahtera 15% RM117.45 Housing, education, healthcare and other approved needs
Akaun Fleksibel 10% RM78.30 Withdraw anytime, minimum RM50

All three accounts earn the same dividend rate. However, money taken out of Akaun Fleksibel stops earning dividends from the day it is withdrawn, so frequent withdrawals reduce the year’s dividend.

What Does EPF Dividend History Look Like?

EPF has paid at least 5% on conventional savings every year since 2009. For 2025, EPF declared 6.15% on both conventional and Shariah savings, a total payout of RM79.6 billion.

Year Simpanan Konvensional Simpanan Shariah
2025 6.15% 6.15%
2024 6.30% 6.30%
2023 5.50% 5.40%
2022 5.35% 4.75%
2021 6.10% 5.65%
2020 5.20% 4.90%
2019 5.45% 5.00%
2018 6.15% 5.90%
2017 6.90% 6.40%
Conventional savings carry a legal minimum dividend of 2.5% a year. Shariah savings have no such guarantee, since returns depend entirely on Shariah-compliant assets.
EPF Dividend History Malaysia - 2017 to 2025
EPF Dividend History Malaysia

How is the dividend worked out?

EPF doesn’t just multiply your year-end balance by the rate. Each contribution earns only for the months it actually sits in the account. Someone starting 2025 with RM100,000 and adding RM1,000 a month would earn:

  • RM6,150 on the opening balance (a full 12 months)
  • RM338.25 on the 12 monthly contributions, each earning for fewer months than the last
  • RM6,488.25 in total
EPF’s retirement adequacy benchmark puts a comfortable urban retirement at around RM650,000, which is why regular, on-time contributions matter. 
Also check out: EPF Withdrawal Malaysia 2026: Rules, Age, Types & How to Apply

What Payroll Mistakes Catch Employers Out Most Often?

Most EPF errors are small and repeated every month. They often only show up during an audit or when an employee checks their i-Akaun.

  • Multiplying instead of using the schedule. For wages up to RM20,000, the Third Schedule amount is the legal figure.
  • Dropping to 12% because of a bonus. If an employee normally earns RM5,000 or less and a bonus pushes that month over the line, the employer rate stays at 13%.
  • Missing the age 60 switch. Keeping a 63-year-old on the 11% and 13% rates means both sides overpay every month.
  • Ignoring foreign workers. Anyone still treating non-Malaysian staff as exempt is under-contributing from October 2025 wages onward.
  • Mixing up overtime and holiday pay. Overtime is excluded, but pay for regular work on a public holiday usually isn’t. Accurate records from time attendance software make the distinction easier to prove.
  • Leaving payment to the 14th. The deadline is when funds reach KWSP, not when you hit submit.
Info-Tech’s payroll software prevents most of these. It applies the right rate based on each employee’s age and status, uses the Third Schedule for every calculation, keeps exempt items out of EPF wages and produces the e-Caruman file for upload to i-Akaun (Majikan).

EPF Contribution Rate FAQs

What are the EPF contribution rates for 2026?

In 2026, Malaysians and PRs below 60 contribute 11% of their wages, with employers adding 13% for wages of RM5,000 and below or 12% above that. At 60 and above, Malaysian citizens pay 0% and employers pay 4%, PRs pay 5.5% with employers paying 6.5% (or 6% above RM5,000), and non-Malaysian employees and their employers each pay 2%.
Add up your EPF-liable wages (salary, bonuses, allowances, but not overtime or travel claims), then find your wage band in KWSP’s Third Schedule to get the exact amount if you earn RM20,000 or less. Above RM20,000, multiply your wages by your rate (11% for Malaysians below 60) and round up to the next ringgit.
There isn’t one yet. EPF doesn’t pay a fixed interest rate; it declares a dividend after each financial year ends, so the rate for 2026 will be announced around February or March 2027. The latest declared rate is 6.15% for 2025, for both Simpanan Konvensional and Simpanan Shariah. Conventional savings are also guaranteed a minimum of 2.5% a year under the EPF Act 1991.
For a Malaysian employee below 60, the employee contributes 11% of salary and the employer 13% (or 12% once salary goes above RM5,000). On a RM1,700 salary, that’s RM187 from the employee and RM221 from the employer, a total of RM408. At RM3,000 it’s RM330 and RM390 (RM720 in total), and at RM5,000 it’s RM550 and RM650 (RM1,200). Above RM5,000 the employer rate drops to 12%, so a RM6,000 salary means RM660 from the employee and RM720 from the employer (RM1,380), while RM10,000 works out to RM1,100 and RM1,200 (RM2,300). For salaries in between round figures, contributions are based on the top of the Third Schedule wage band, so RM3,250 gives RM359 from the employee and RM424 from the employer.