SOCSO Contribution Is Now Compulsory

SOCSO Contribution Is Now Compulsory

All employees in Malaysia now has to contribute towards SOCSO (Social Security Organisation), which covers them in the event of any accidents or disability.

Previously, employers could choose not to register workers with starting salaries of more than RM3,000. However, with the new amendment to the Employees’ Social Security (Amendment) Act 2015, contribution has been made compulsory across the board.

SOCSO’s chief executive Datuk Dr Mohammed Azman Aziz Mohammed said the amendment was made to ensure that all workers are protected under the scheme.

The Government hopes that these amendments will improve employees’ social security protection, while providing better and more efficient service to safeguard the insured persons and their dependents, he added.

Beginning June 1, 2016, all employees will be registered under SOCSO regardless of their starting salary. Benefits accorded to them will be based on a ceiling rate of RM4,000.

A total of 6.5 million workers are expected to benefit from this. Previously, the number of SOCSO members were 6 million. The addition of 500,000 workers will increase SOCSO’s monthly collections and also offer higher benefits to those eligible.

In 2015, SOCSO collected RM2.83 billion and the benefit payment was RM2.68 billion. The benefit payment excludes maintenance, administration cost and other expenditures.

According to SOCSO’s chief executive, if the amendments had not been made, by 2018 the collections verses the benefit would be equal. In 2019, they would need to dip into their reserve, which now amounts to RM23 billion. If the situation persists, by 2029, the reserves would be completely gone.

Prior to the amendment, the maximum payment for Temporary Disablement Benefit was RM78.67 per day. With the new amendment, the amount of benefit will increase by 33.9% to RM105.33 per day.

For Permanent Disablement Benefits, the quantum will be increased from RM88.50 per day to RM118.50. For Dependent’s Benefits, it will increase from RM2,655 to RM3,555 per month. There will also be an increase in the amount of payments for benefits under the Invalidity Scheme. The maximum pension for Invalidity and Survivors’ Pension would increase from RM1,917.50 to RM2,567.50 per month.


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