Prepared by:Mizar Mustafa 2009481448Nur Hazwani Bt Abd Hamid 2008349171Noor Zakiah Bt Khairuzzaman 2008280242Norsalmiah Bt Kamaruddin 2009208448Fatin Najiha Bt Mohd Napiah 2008743521

Prepared For:Miss Afzan Nor Bt Hj

Talib

What is EPF ?Employees Provident Fund (EPF) is a

compulsory savings scheme in Malaysia. The objective is to provide saving for old age

retirement to its members. It is commonly known as KWSP or Kumpulan

Wang Simpanan Pekerja.Act related with EPF is Employees Provident

Fund Act 1991 - the act that governing the Employees Provident Fund in Malaysia.

Definition of Wages under EPF ActAll remuneration in money, due to an

employee under his contract of service or apprenticeship and includes any bonus or allowance payable by the employer to the employee but does not include:Service chargeOvertime paymentAny gratuityAny retirement benefitAny retrenchment or termination benefitAny travelling allowance

The Purpose of The LawTo provide financial relief or social security

protection for workers through compulsory savings Provides retirement benefits for members through

management of their savings in an efficient and reliable manner

To help employees from both private and non-pensionable public sectors save a fraction of their salary in a lifetime banking scheme

To preserving and growing the saving of its members in a prudent manner in accordance with best practices in investment and corporate manner

Employee EPF Act Section 2:

Employees : sixteen years employed under a contract of service or

apprenticeship, whether written or oral and whether expressed or implied, to work for an

employer

All employees in Malaysia should registered under EPF

Who are Liable to Contribute?Directors who receive salary/wage.Part time, temporary and probationary employees.Employees who are 75 years old and 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Employees who have withdrawn their savings under the Pensionable Employees Withdrawal, and work with employers other than the Federal or State Governments, or any statutory bodies or local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.

Who Is Not Mandatory To Contribute But Can Contribute?

Persons Who Are Not Employees

Payments Which Are Mandatory For EPF Contribution Salary/Wage;Bonuses;Allowances;Commission;Accrued salary/wage;Salary/wage for maternity leaves;Salary/wage for study leaves;Salary/wage for half-pay leaves;Directors salary/wage; and

Wages Section 2 of EPF Act 1991:

All remuneration in money Employee under contract of service or

apprenticeship.to be paid monthly, weekly, daily or otherwise,any bonus or allowance payable by the employer to

the employee does not include—

(a) service charge;(b) overtime payment;(c) gratuity; or(d) retirement benefit.

Rate of contribution for the month

Employer contribution= 12%Employee contribution= 11% (latest=8%)

Amendment of Third Schedule of the EPF Act 1991Section 43.(1)

Amount of wages for the month

Rate of contribution for the month

By the employer

By the employee

Total contribution

From (8%) 2,000.01 2,020.00 243 162 405

From (11%) 2,000.01 2,020.00 223 182 405

Part C, Third Schedule of the  EPF Act 1991

Part D, Third Schedule of the  EPF Act 1991

the rate of  contribution  for the  foreigners 

the contribution rate for members

Contributions received on employee behalf from employer will be credited into the two accounts:

Types Of Withdrawal Age 50 Years Withdrawal Age 55 Years Withdrawal Withdrawal to Reduce / Redeem Housing Loan Incapacitation Withdrawal Leaving Country Withdrawal Education Withdrawal Pensionable Employees Withdrawal And Optional Retirement

Withdrawal Members’ Savings Investment Withdrawal Withdrawal to Purchase a House Withdrawal to Build a House Withdrawal Of Savings Of More Than RM1 Million Housing Loan Monthly Instalment Withdrawal Death Withdrawal Flexible Housing Withdrawal *NEW* Health Withdrawal

Withdrawal Of ContributionsSection 54 (1)54. (1) No sum of money standing to the credit of a member

of the Fund may be withdrawn except with the authority of the Board and, subject to any regulations and rules made under this Act, such authority shall not be given unless the Board is satisfied that—

 (a) the member of the Fund has died;(b) the member of the Fund has attained the age of fifty-five years;(c) the member of the Fund is physically or mentally incapacitated from engaging in any further employment; or(d) the member of the Fund is about to leave Malaysia with no intention of returning thereto or of residing in the Republic of Singapore.

WithdrawalPensionable Employees Withdrawal

Optional Retirement Withdrawal

Employed in the Public Service and contributed to the EPF until the Public Service Department (PSD) emplaced you in the pensionable establishment; OREmployed with the Ministry of Defence/Military Service and contributed  to the EPF and have been emplaced in the pensionable establishment by the PSD.

You have chosen optional retirement from the Public Service and  no longer employed; OR You have chosen optional retirement from the Public Service and re-employed with a different employer or self-employed; ORYou have served in a government agency and have opted for retirement under a privatisation or corporatisation exercise but continue to work with the same agency.

If employer fails to deduct your wages for EPF contributions at the time your wages are paid employer would have committed an offence under

the Act and if found guilty, employer may be imprisoned up to six (6) months or fined up to RM2,000 or both

• If employers fail to register their employees with the EPF within 7 days of employment under law.

– section 41(2) of the EPF Act 1991 imprisonment for a term not exceeding 3

years or fine not exceeding RM10,000 or to both

Offences And Penalties

Returning The Savings WithdrawnIf employees their withdrawn savings to buy or build a house, use all the savings withdrawn for that purpose only. Otherwise, return the amount withdrawn to the EPF within six months from the date of withdrawal. Failure to do so is an offence punishable under Section 58A of the EPF Act 1991.

If convicted, you can be imprisoned for up to six months or fined up to RM2,000 or both.

Fraudulent Withdrawal Of EPF SavingsIf employees attempt to withdraw or have their withdrawn savings fraudulently, they have committed an offence under: Section 59 of the EPF Act 1991.

The penalty under this Section is imprisonment for a term of up to three years or a fine up to RM10,000 or both.

Section 61 of the EPF Act 1991 if you or any other parties collaborate to withdraw

the savings of EPF Members fraudulently. 

Employer’s Legal Obligation Under The Law

a) Duty of employer to register with the Board.

b) Duty to register the employeec) Duty of employer to contribute on

behalf of employeesd) Duty of employer to contribute for

employeese) Duty to cooperate with the inspector

Definition of EmployerEmployers is someone who is said to be the

one who made an agreement with an employees for the service rendered and the agreement is normally called as contract of service.

Who control the employees?Who provide the facilities and equipment?Who are paying for employees’ wages and

salaries?

Section 2 : "employer" means the person with whom an employee has entered into a

contract of service or apprenticeship and includes—

(a) a manager or agent(b) any body of persons(c) any Government, department of

Government, statutory bodies, local authorities or other bodies.

a) Duty of Employer to Register With The Board.

Upon the day of paying the wages and salary of employees, the employer have a duty to register with the board about their existence.

In the case of the employer are no longer being an employer, he need to inform the Board within 3o days.

Disobey of the employer to do so may cause them to be imprisonment about <3 years or fines <RM10,000 or both.

41. (1) Every employer shall, unless he is already registered with the Board, before the end of the first week in the first month in which he is paying wages in respect of which he is required to pay contributions under this Act, register with the Board in the manner as may be prescribed by the Board.

41.(3) Where any person ceases to be an employer, within the meaning of this Act, he shall, within thirty days of such cesser, notify the Board of the same in the manner as may be prescribed by the Board.

b) Duty To Register The Employee

It is the responsibility of employer to enroll the employee as a EPF subscriber.

Provide the information detailed about the employees regarding the names, age, status, and etc.

Help the inspector to make any inspection.

c) Duty of Employer to contribute on behalf of employees

The EPF Act 1991 requires all employers to pay on behalf of employees their monthly contributions to EPF before or on the 15th day of every month.

Failed to comply with the act will caused the employers to be fined.

d) Duty of employer to contribute for employees

EPF Act 1991 stated that each employers are responsible to contribute a proportion of amount to EPF account

Failed to comply with the act will caused the employers to be fined.

2007, the EPF contribution is up to 11% of employee’s monthly salary on the part of employees, while the employer is obligated to additionally fund at least 12% of employee's salary to the savings at the same time.

45. (1) …the employer shall, in the first instance, be liable to pay both the contributions payable by himself and also, on behalf of and to the exclusion of the employee…

c) Duty of employer to prepare and furnish statement of wages.

Employer are accountable to prepare a statement of wages showing the detailed amount of deduction and total salary received by employees.

Any incorrect declaration, failure to furnish or return documents is said to be guilty may be liable to:a) imprisonment < 3 years; orb) a fine < RM10,000; or c) Both.

• 42.(1) Every employer shall prepare and furnish statement of wages to each and every employee and the statement of wages shall contain such information as may be prescribed by the rules.

d) Duty to cooperate with the inspector

Inspector include of the General Manager, Deputy General Managers and Assistant General Managers.

They are the person who have power to exercise any action necessary to ensure the Act is carried out.

Employer need to cooperate with the inspector to provide or produced detailed of any information that can help him in exercising his duties.

36. (1) No person shall—(a) refuse any Inspector exercising his powers to access to

any premises or part thereof;(b) assault, obstruct, hinder or delay such Inspector in

effecting any entrance which he is entitled toeffect;(c) fail to comply with any lawful demands of an Inspector in

the execution of his powers, functions and duties under section 35;

(d) refuse to give to an Inspector any information which may reasonably be required of him;

(e) fail to produce to, or conceal or attempt to conceal from, an Inspector, any property, book, other document, or article in relation to which the Inspector has reasonable grounds for suspecting that an offence has been or is being committed under this Act; or

(f) furnish to an Inspector as true, information which he knows or has reason to believe to be false.

Withdrawal & Benefit Scheme Retirement WithdrawalsWhen a member reach the retirement age of 55 years,

he/she can choose to do any of the followings:-

a)Withdraw all the savings in a lump sum.b)Withdraw all the savings in monthly instalments or part of the savings in a lump sum and the balance periodically on the following conditions:The member must have, at least, RM12,000 in his account for the periodical withdrawal payments covering a period of at least five years.c)Withdraw the dividend annually, leaving the principle with the Fund.

Pre Retirement Benefits

a) Housing A member can withdraw has savings in Account II

for the purpose of purchasing/building a house.

The amount he can withdraw is the difference between the cost of the house and the housing loan plus 10% of the cost or the balance in Account II, whichever is lower.

Withdraw = Cost – ( Housing loan + 10% of cost)

b) Redemption/ Reduction/ Mortgage Loan

Housing LoanA member can withdraw his savings in Account II to reduce outstanding housing loan annually subject to :

amount of not less than RM500 it also can be withdrawn before the employees

reach 55 years.

Education Members are allowed to withdraw their savings

to finance their education at diploma level or higher for themselves and their children.

Age 50 Years A member can withdraw his savings in

Account II when he attains age 50 years to make preparation for retirement (30%).

Health Members may withdraw their savings in

Account II to pay for the cost of their medical treatment or their parents, spouse or children’s critical illness. However, members will not be eligible to withdraw for this purpose if the cost is fully borne by their employers.

Leaving The Country Withdrawal

Members who are foreign citizens, intending to leave the country may withdraw their entire savings under this withdrawal.

However, members who are Malaysian citizens intending to leave the country with no intention to return, may withdraw all savings provided they revoke their Malaysian citizenship.

• Other Withdrawals

a)A member can withdraw all his savings on being incapacitated mentally or physically. In addition he will also receive an incapacitation benefit of RM5,000 if he is below 55 years of age.

b)A member can withdraw all his savings, when he leaves Malaysia permanently. As proof of his intention to leave the country permanently he needs to renounce his citizenship.

c)On a member’s death, his nominee/next of kin may withdraw all his savings. In addition, the member’s next of kin will also be paid the death benefit of RM2,500 if the deceased members has not attained 55 year age.

c) Dividend

Returns on investments is distributed to members as dividends annually. The amount to be appropriated as dividend is the income less operating expenditure and payments of Death and Incapacitation Benefits. The EPF guarantees an annual dividend of at least, 2.5%.

d) Tax Incentives

The employee’s share of the contributions together with life insurance premium is tax deductible up to RM6,000. In addition EPF’s investment income is not taxed and this incentive is enjoyed by members in the form of higher dividends. Lastly, both pre and retirement withdrawals are also not taxed.

Analysis of The EPF

Any Questions?

THE END