# The Employees Provident Fund Act 1991: How EPF Works in Malaysia

> The Employees Provident Fund Act 1991 (Act 452) is Malaysia's statute governing mandatory retirement savings for private-sector and non-citizen employees, setting contribution rates, the 2.5% minimum dividend guarantee, withdrawal rules, and employer penalties.

- Category: employment
- Language: en
- Status: published
- Updated: 2026-08-14
- Canonical: https://negaraku.md/en/employment/employees-provident-fund-act-1991

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Every payslip in private-sector Malaysia carries an 11% deduction that vanishes
into a fund you cannot touch for decades — and behind that line sits a single
statute. The **Employees Provident Fund Act 1991**, cited as **Act 452**, is
"an Act to provide for the law relating to a scheme of savings for employees'
retirement and the management of those savings." It came into force on
**1 June 1991**, replacing the Employees Provident Fund Ordinance 1951 that first
established the fund on 1 October 1951, and it operates under the purview of the
**Ministry of Finance**.

The scheme is run by the Employees Provident Fund (EPF, or **KWSP**, *Kumpulan
Wang Simpanan Pekerja*). As at 31 December 2024, its investment assets stood at
**RM1.25 trillion** — 63% invested domestically — serving a total membership of
**16.22 million**, of whom 8.78 million were active.

## Who must contribute, and how much?

**Section 43(1)** makes contributions compulsory: every employee, and every
employer of an employee, must pay monthly contributions on wages at the rates in
the **Third Schedule**. **Section 2** defines "wages" as all remuneration in
money due under a contract of service — including bonuses and commissions — but
excludes service charges, overtime, gratuity and retirement benefits.

| Employee | Employee rate | Employer rate |
| --- | --- | --- |
| Malaysian below age 60 | 11% | 13% (12% on wages above RM5,000) |
| Non-Malaysian citizen (from 1 Oct 2025) | 2% | 2% |

Since **1 October 2025**, contributions have been mandatory for non-Malaysian
citizen employees, each side paying 2% of monthly wages; non-citizens over age
75 need not register or contribute.

## What are the deadlines and penalties?

Contributions for a wage month must be paid by the employer **on or before the
15th day of the following month**. Non-compliance is not merely a civil debt:
under **Section 43(2)**, an employer who fails to pay contributions commits an
offence and is liable, on conviction, to **imprisonment of up to three years or
a fine of up to RM10,000, or both**.

## How are dividends guaranteed?

**Section 27** requires the Board, with ministerial approval, to declare an
annual dividend that shall be **not less than 2.5% per annum** — a statutory
floor that has rarely been tested in practice. For financial year 2024, the EPF
declared **6.30%** for Simpanan Konvensional (RM63.05 billion) and 6.30% for
Simpanan Shariah (RM10.19 billion), a total payout of RM73.24 billion. A year
earlier, for 2023, it declared 5.50% and 5.40% respectively.

## When can savings be withdrawn?

Members reaching **age 55** have their savings consolidated into **Account 55
(Akaun 55)** and may withdraw all or part at any time. Contributions made after
age 55 go into **Akaun Emas**, which becomes fully accessible at **age 60**.

Separately, the **11 May 2024** restructuring split members' savings from two
accounts into three — **Akaun Persaraan**, **Akaun Sejahtera** and **Akaun
Fleksibel** — with new contributions allocated **75% / 15% / 10%** across them.
Akaun Fleksibel is designed for short-term needs and can be tapped before
retirement.

## What's next

This is the legal skeleton; the practical mechanics — exact banded ringgit
amounts, the several rate options at age 60 and above, and remittance through the
i-Akaun employer portal — should be confirmed against KWSP's own Mandatory
Contribution pages and the Third Schedule of Act 452 before you rely on any
specific figure.

## Sources

- Employees Provident Fund Act 1991 — https://www.commonlii.org/my/legis/consol_act/epfa1991282/ (Commonwealth Legal Information Institute (CommonLII))
- Employees Provident Fund (Malaysia) — https://en.wikipedia.org/wiki/Employees_Provident_Fund_(Malaysia) (Wikipedia)
- Employees Provident Fund Act 1991 (statutory analysis) — https://www.lowpartners.com/employees-provident-fund-act-1991/ (Low & Partners Advocates & Solicitors)
- EPF Contribution Rates 2026: Employee and Employer Rates by Salary — https://money.com.my/guides/epf-contribution-rates-2026 (money.com.my)
- Employer Mandatory Contribution — https://www.kwsp.gov.my/en/employer/responsibilities/mandatory-contribution (Kumpulan Wang Simpanan Pekerja (EPF/KWSP))
- EPF Account Restructuring 2024 — https://www.kwsp.gov.my/en/member/account-centre/account-restructuring (Kumpulan Wang Simpanan Pekerja (EPF/KWSP))
- No Change To Age 55 Withdrawal And Introducing Akaun Emas For Age 60 Withdrawal — https://www.kwsp.gov.my/en/w/no-change-to-age-55-withdrawal-and-introducing-akaun-emas-for-age-60-withdrawal (Kumpulan Wang Simpanan Pekerja (EPF/KWSP))
- EPF Declares 6.30% Dividend For Simpanan Konvensional And 6.30% For Simpanan Shariah — https://www.kwsp.gov.my/en/w/epf-declares-630-dividend-for-simpanan-konvensional-and-630-for-simpanan-shariah-ln (Kumpulan Wang Simpanan Pekerja (EPF/KWSP))
- EPF Sustains Solid Performance With 5.50% Dividend For Simpanan Konvensional And 5.40% For Simpanan Shariah — https://www.kwsp.gov.my/en/w/press-release-dividend2023 (Kumpulan Wang Simpanan Pekerja (EPF/KWSP))
- EPF Begins Mandatory Contributions For Non-Malaysian Citizen Employees Effective October 2025 — https://www.kwsp.gov.my/en/w/news/epf-begins-mandatory-contributions-for-non-malaysian-citizen-employees-effective-october-2025 (Kumpulan Wang Simpanan Pekerja (EPF/KWSP))
- EPF Investment Assets At RM1.25 Trillion, 63 Pct Invested In Domestic Market — https://www.bernama.com/en/news.php?id=2397953 (BERNAMA (Malaysian National News Agency))

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