Who are liable/not liable to contribute?

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Who are liable/not liable to contribute?

Post  Joblisted on Sat Aug 15, 2009 9:43 pm

Landing your first job is a wonderful experience. It is a start of a new chapter in your life. At the same time, it can also be scary. You are now responsible for your own money.

Now, apart from the formalities that you have to go through with your employer, there are also certain formalities that you have to go through with the Government, through its agencies. There are matters related to your income tax as well as your contributions to the Social Security Organisation (SOCSO) and Employees Provident Fund (EPF).

Income tax is self-descriptive, while SOCSO is a form of an insurance policy to cover you during your working hours. EPF contributions, however, are for your own use after your retirement. A compulsory savings account, if you like.

You may want to note that apart from your own contributions, which come from your salary, your employer is also required to contribute towards your EPF savings.

1) Who are Liable to Contribute?


With a few exceptions, all individuals who work for a wages, as defined by various Malaysia laws, are required to make EPF contributions. They include:

*Directors who receive salary/wage.
*Part time, temporary and probationary employees.
*Employees are to contribute until the age of 75 years old if they are still working regardless whether they have or have not made the full withdrawal/part of it after attaining the age of 55 years old.
*Employees who are 55 years and above, and have never been a member of the EPF.
*Employees who have withdrawn their savings under the Pensionable Employees Withdrawal, and work with employers other than the Federal or State Governments, or any statutory bodies or local authorities.
*Employees who have previously made full withdrawal under the Incapacitation Withdrawal and have since recovered and are re-employed in any service.

Payments Which Are Mandatory For EPF Contribution

In general, all payments which are meant to be salary or wage are accountable in your monthly contribution amount calculation. These include:

* Salary/Wage;
* Payment to replace service termination notice;
* Payment for unutilised leaves;
* Bonuses;
* Allowances;
* Commision;
* Accrued salary/wage;
* Salary/wage for maternity leaves;
* Salary/wage for study leaves;
* Salary/wage for half-pay leaves;
* Directors salary/wage; and
* Other payments stipulated under contracts of services/employment or vice versa.


2) Who Are Not Liable To Contribute But Can Opt To Do So?

Making EPF contributions is not only for those required to do so by Laws. Voluntary participation from those who are not covered by the EPF laws is most welcomes. After all, it is to your own advantage to have savings for the later part of your life.

The following categories of workers are not required to make EPF contributions but can opt to do so:

*Domestic servant employed in a residential home, whose wages are paid by an individual (house owner).

Notice of election (to contribute) can be made through Form KWSP 16 and Form 16A. Form KWSP 16 must be submitted to the EPF whereas Form KWSP 16A to the employer.

*Foreign workers who enters and remains temporarily in Malaysia under the provisions of any written law relating to immigration.

Notice of election (to contribute) can be made through Form KWSP 16B and Form 16C. Form KWSP 16B must be submitted to the EPF whereas Form KWSP 16C to the employer.

*Sole proprietors or partners who are not paid wages, pensionable employees as well as those who are neither an employer nor employee as defined by the EPF Act.

Notice of election (to contribute) can be made through Form KWSP 6A (1).

*Employees (Malaysian citizens/foreign citizens) who have withdrawn all their savings under Leaving The Country Withdrawal Scheme and have since returned and are re-employed in Malaysia.

Notice of election to re-contribute can be made through Form KWSP 20B and Form 20C. Form KWSP 20B must be submitted to the EPF whereas Form KWSP 20C to the employer.


Last edited by Joblisted on Sat Aug 15, 2009 9:55 pm; edited 1 time in total

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Re: Who are liable/not liable to contribute?

Post  Admin on Sat Aug 15, 2009 9:49 pm

Thanks for the info

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Re: Who are liable/not liable to contribute?

Post  crazzycat on Fri Jan 15, 2010 8:23 pm

yeah this info is always suitable
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