The Government has agreed to lower employees’ contribution to the Employee’s Provident Fund (EPF) by 3% beginning March 2016 to December 2017 as part of the revised Budget 2016.
However, employees will have the option of maintaining their contribution to EPF at 11%.
EPF said in a statement that members could fill up a form and submit it to their employers so that they can contribute more than the statutory rate.
“Employers will then forward the notices to the nearest EPF branch,” the government agency said.
The notice, labelled Notis 17A Khas 2016, would be made available for download from EPF’s website beginning 2 February. The new monthly contribution rate (Schedule Three) can be downloaded from Feb 16, EPF said.
The move to cut employee contributions from 11% to 8% was among 11 restructured and recalibrated measures to ensure the economy and country’s financial position remain on the right track.
Contribution by employers will remain at 12% (for employees earning above RM5,000) and 13% (for employees earning RM5,000 and below).
The new rate means that employees will now have a higher discretionary income to cope with the rising cost of living. The move is expected to increase private sector spending by RM8 billion a year.
A similar reduction was imposed between January 2008 and December 2009 amid a global financial crisis.
Should you go for 8% or 11% EPF contributions? Find out here.
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