PETALING JAYA: More than five million Employees Provident Fund (EPF) members have opted to reduce their monthly contribution to 9% from January.
The government decided to allow members to reduce the 11% statutory monthly contribution to 9% in order to boost their disposable income during the Covid-19 pandemic.
An EPF spokesman said they received 2.09 million applications from members who were keen to maintain the full rate.
“The applications were made through their employers via Borang KWSP 17A (Khas 2021) forms.
“Based on the requests, there was a total of 5.4 million applications who opted out of contributing the full 11%, ” said the spokesman. EPF currently has 7.49 million active members.
The reduced rate is in effect for wages from January to December of 2021.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz announced the move when tabling Budget 2021 last November.
It was, however, not the first time employees were offered the option to reduce their monthly contributions.
In February last year, when then prime minister Tun Dr Mahathir Mohamad announced the 2020 Economic Stimulus Package to mitigate the impact of Covid-19, the employee EPF contribution rate was reduced from 11% to 7% from April to December.
As of last year, EPF reported that at least 54% of its members or 7.9 million out of 14.6 million aged 54, have savings of less than RM50,000 for retirement.
Over the last 12 years, EPF paid more than 5% in dividends annually to its members, except for 2008, when the global financial crisis led to a payout of 4.5%.