Locally known as Kumpulan Wang Simpanan Pekerja (KWSP), Malaysia’s Employees Provident Fund (EPF) will align the minimum contribution of employees and employers with the Minimum Wages Order (Amendment) 2018 of RM1,100 for both Peninsular Malaysia, and Sabah and Sarawak, starting January 1, 2019.
As per the revised plan, EPF said a minimum contribution of RM264 was expected to be received from every worker who earned monthly wages. This is, however, subject to whether the employee is employed for the full month. Also, varied minimum contributions may apply to members who are salaried on a weekly, daily or hourly basis.
The notices have already been sent to all registered employers, informing them about these changes. EPF has also informed them that it would work closely with employers to ensure the smooth implementation of the policy.
CEO Tunku Alizakri Alias said, “Alignment of the minimum wage should help EPF members achieve sufficient savings for their retirement and help strengthen their future financial resilience.”
The current scenario is that 1.64 million, or 23 percent, of the 7.11 million active EPF members contributed less than the current minimum wage of RM1,000. Tunku Alizakri highlighted low wages, particularly among low-income earners, as one of the primary reasons why many Malaysian workers retired with insufficient funds. Now, with the new measure in place EPF expects some improvement as it will help to increase productivity, loyalty as well as incentivize employees to do their best for the organization.
“With the proven success of EPF’s Retirement Advisory Services for members, the fund will be providing free retirement advisory services for employers, including having dedicated officers to manage the employers’ relationship with EPF,” he said.
While EPF is confident about employers benefitting from the new measure in the long run, it is only by the end of next year that the impact of Minimum Wages Order (Amendment) 2018 will begin to unfold.