EPF (KWSP) is one of the mandatory salary deductions for employees in Malaysia. Whether you're an employee checking your payslip or an employer managing payroll, understanding how EPF is calculated helps ensure contributions are accurate and compliant with the latest regulations.

What Is EPF (KWSP)?

The Employees Provident Fund (EPF) or Kumpulan Wang Simpanan Pekerja (KWSP) is Malaysia's mandatory retirement savings scheme. Every month, both employees and employers contribute to an employee's EPF account based on the employee's monthly wages.

These savings help provide financial security after retirement while supporting other approved withdrawal schemes.

EPF Contribution Rates in Malaysia

The contribution rate depends on an employee's monthly salary and eligibility.


Monthly Salary

Employee

Employer

RM5,000 and below

11%

13%

Above RM5,000

11%

12%

Different contribution rates may apply to employees aged 60 and above, non-Malaysian workers, or when temporary government measures are announced.

How to Calculate EPF

EPF contributions are calculated using the employee's monthly wages and the applicable contribution rate.

Employee EPF = Monthly Salary × Employee Contribution Rate

Employer EPF = Monthly Salary × Employer Contribution Rate

Total EPF = Employee Contribution + Employer Contribution

Want to skip manual calculations? Use our EPF Calculator Malaysia to calculate employee and employer contributions instantly.

EPF Calculation Example

An employee earns a monthly salary of RM3,000.


Contribution

Amount (RM)

Monthly Salary

3,000

Employee EPF (11%)

330

Employer EPF (13%)

390

Total EPF Contribution

720

This means RM330 is deducted from the employee's salary, while the employer contributes an additional RM390 to the employee's EPF account.

What Salary Payments Are Subject to EPF?

EPF is generally calculated based on wages such as:

  1. Basic salary
  2. Fixed allowances
  3. Commission
  4. Overtime payments, where applicable

The following are generally not included:

  1. Travel or meal reimbursements
  2. Benefits-in-kind
  3. Other non-wage payments, subject to EPF guidelines

Why Accurate EPF Calculations Matter

Accurate EPF calculations help:

  1. Ensure employees receive the correct retirement savings.
  2. Keep employers compliant with EPF regulations.
  3. Reduce payroll errors and disputes.
  4. Make payroll processing faster and more accurate.

Tips for Employers

To minimise payroll errors:

  1. Use the latest EPF contribution rates.
  2. Refer to the official EPF contribution table when processing payroll.
  3. Check employee salary changes before calculating contributions.
  4. Review payroll reports before submitting contributions.
  5. Use an online EPF Calculator Malaysia to verify contribution amounts.

FAQs

Is EPF mandatory in Malaysia?

Yes. EPF contributions are generally mandatory for Malaysian employees covered under the Employees Provident Fund Act 1991.

How is EPF calculated?

EPF is calculated based on an employee's monthly wages and the applicable employee and employer contribution rates.

Is EPF calculated using gross salary?

EPF is generally calculated based on wages before statutory deductions, subject to the EPF contribution guidelines.

What is the current EPF contribution rate?

For most Malaysian employees below 60 years old, the employee contribution rate is 11%, while employers contribute 12% or 13%, depending on the employee's monthly salary.