The Employees Provident Fund Act 1991 — cited as Act 452 — is the Malaysian statute that governs the country's mandatory retirement-savings scheme, run by the Employees Provident Fund (EPF, or KWSP). It came into force on 1 June 1991, replacing the 1951 Ordinance, and operates under the Ministry of Finance. Section 43 makes monthly employer and employee contributions compulsory, Section 27 guarantees an annual dividend of at least 2.5%, and non-payment is a criminal offence.
- Act 452 came into force on 1 June 1991, replacing the Employees Provident Fund Ordinance 1951, and operates under the Ministry of Finance
- Section 43 requires both employee and employer to pay monthly contributions at Third Schedule rates — for a Malaysian below 60, employee 11% and employer 13% (12% on wages above RM5,000)
- Section 43(2): an employer who fails to pay contributions is liable on conviction to up to 3 years' imprisonment or a fine up to RM10,000, or both
- Section 27 requires the Board to declare an annual dividend of not less than 2.5% — 6.30% was declared for financial year 2024
- From 1 October 2025, contributions became mandatory for non-Malaysian citizen employees at 2% each; those over 75 need not register
- Since 11 May 2024, savings are split across three accounts — Akaun Persaraan (75%), Akaun Sejahtera (15%), Akaun Fleksibel (10%)
Who this applies to: Employers, employees, foreign workers, and payroll or HR practitioners who need the legal basis for EPF/KWSP obligations in Malaysia.
On this page
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.
What happens if an employer does not pay EPF?
Non-payment is a criminal offence. Under Section 43(2), an employer who fails to pay contributions is liable on conviction to imprisonment for up to three years or a fine of up to RM10,000, or both. Contributions for a wage month are due on or before the 15th day of the following month.
Do foreign workers have to contribute to EPF?
Yes. Effective 1 October 2025, EPF contributions became mandatory for non-Malaysian citizen employees, with the employer and employee each contributing 2% of monthly wages. Non-citizens over age 75 are not required to register or contribute.
The following are deliberately unstated or described only qualitatively until confirmed by a subject-matter expert:
- Exact age-60-and-above contribution rates and the several rate options — confirm against KWSP 'Mandatory Contribution' page and the Third Schedule before stating specific numbers
- Precise current wording and rate rows of the Third Schedule (the RM5,000 threshold split) — confirm against the AGC consolidated text rather than payroll-blog summaries
- Whether the minimum-dividend guarantee section is s.27 (some secondary sources cited s.54) — confirm in the AGC statute text
- Exact section number for age-55 withdrawal (a source labelled it 's.55A') — confirm in AGC text
- The financial year 2025 dividend rate (6.15% appeared in one snippet) — confirm the official KWSP press release before stating as declared
- Latest fund size (RM1.25 trillion, end-2024) and membership (16.22m total / 8.78m active) — refresh against KWSP's most recent annual report at publish time
Sources
- Employees Provident Fund Act 1991 — Commonwealth Legal Information Institute (CommonLII)
- Employees Provident Fund (Malaysia) — Wikipedia
- Employees Provident Fund Act 1991 (statutory analysis) — Low & Partners Advocates & Solicitors
- EPF Contribution Rates 2026: Employee and Employer Rates by Salary — money.com.my
- Employer Mandatory Contribution — Kumpulan Wang Simpanan Pekerja (EPF/KWSP)
- EPF Account Restructuring 2024 — Kumpulan Wang Simpanan Pekerja (EPF/KWSP)
- 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 — Kumpulan Wang Simpanan Pekerja (EPF/KWSP)
- EPF Sustains Solid Performance With 5.50% Dividend For Simpanan Konvensional And 5.40% For Simpanan Shariah — Kumpulan Wang Simpanan Pekerja (EPF/KWSP)
- 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 — BERNAMA (Malaysian National News Agency)
Change history
| Version | Date | Change | By |
|---|---|---|---|
| 01.00 | 14 Aug 2026 | Approved and published. | — |