How EPF / KWSP Works in Malaysia
Everything you need to know about your EPF contributions, the three accounts, and how to make the most of your retirement savings.
What is EPF?
The Employees Provident Fund (EPF), or Kumpulan Wang Simpanan Pekerja (KWSP), is Malaysia's mandatory retirement savings scheme. If you're a private sector employee, both you and your employer are legally required to contribute a portion of your monthly salary into your EPF account. It is one of the most important financial tools available to Malaysian workers.
How Much Do You Contribute?
As an employee, you contribute 11% of your monthly gross salary. Your employer contributes an additional 12% (for employees earning above RM5,000) or 13% (for employees earning RM5,000 and below). For example, if you earn RM5,000 per month, you contribute RM550 and your employer adds RM650, giving a total of RM1,200 credited to your EPF account every month.
The Three EPF Accounts
Your EPF savings are divided into three accounts. Account 1 (Akaun Persaraan) holds 75% of your contributions and is locked until retirement at age 55. Account 2 (Akaun Sejahtera) holds 15% and allows for partial withdrawals for housing, education, and medical purposes before retirement. Account 3 (Akaun Fleksibel) holds the remaining 10% and can be withdrawn at any time for any reason — making it the most accessible portion of your savings.
EPF Dividends
EPF declares dividends annually based on investment returns. Historically, EPF has declared dividends between 5% and 6.75% per year for conventional savings. This is significantly higher than a fixed deposit rate, making EPF one of the best guaranteed returns available to Malaysians. Dividends are credited directly to your account.
Tax Relief on EPF
Your EPF contributions qualify for an income tax relief of up to RM4,000 per year. This means if you're a higher-income earner, your EPF contributions actively reduce your taxable income, saving you money on taxes every year.
How to Check Your EPF Balance
You can check your EPF balance anytime via the i-Akaun app (available on iOS and Android) or the EPF website at kwsp.gov.my. Your annual EPF statement is also sent by mail. Make it a habit to check your contributions each month to ensure your employer is remitting the correct amount on time.