One of the key highlights in the recent Budget 2016 recalibration announced by the Prime Minister Datuk Seri Najib Tun Razak was the reduction of the employees\u2019 contribution rate for the Employee\u2019s Provident Fund (EPF) by 3%.<\/p>\n
So, now EPF members have the options of choosing between 8% or 11% of their salary to be contributed to EPF savings every month.<\/p>\n
Will this move put our retirement nest in jeopardy? Due to the global economic slowdown, it is important for the Government to ensure domestic growth to avoid recession within the country.<\/p>\n
One of the main objectives of Malaysia Budget 2016 revision<\/a> is to spur growth, and increasing the people\u2019s disposable income will in turn increase consumer spending.<\/p>\n \u201cConsumer consumption represents 53% of gross domestic product, so consumer spending is a big generator for GDP growth,\u201d said Manokaran Mottain, chief economist at Alliance Bank to The Star Online<\/em><\/a>.<\/p>\n According to the Prime Minister, the reduction rate would translate into RM8 billion in consumer spending.<\/p>\n But the question is, will the additional money you get every month make a difference to your monthly expenses?<\/p>\n Read on to find out how the 3% reduction can impact your finances as a non-taxpayer and a taxpayer:<\/p>\n According to Budget 2015, tax payers with family and income of RM4,000 per month will not have tax liability. These households will not have to pay income tax.<\/p>\n Here\u2019s how much 3% reduction in EPF contribution from March 2016 to December 31, 2017 will mean to these families:<\/p>\n\n If you opt for the 8% EPF contribution rate, you will get an additional RM120 every month, and that will come up to RM2,640 for 22\u00a0months (March 2016 to December 2017).<\/p>\n Calculate your additional take home pay using our calculator below:<\/p>\n<\/span>What the 3% EPF reduction mean to non-tax payers?<\/strong><\/span><\/h2>\n
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\n\t \n\t Monthly Gross Income <\/td> \n\t Old EPF Deduction (11%)<\/td> \n\t New EPF Deduction (8%)<\/td> \n\t Extra Take-home Salary a Month<\/td>