What is the EPF? How to calculate?


The EPF (Employees' Provident Fund) is a Malaysian government agency that manages a compulsory savings plan and retirement planning for private and non-pensionable public sector employees.

The EPF functions through monthly contributions from employees and their employers towards saving accounts. While in savings these funds may be used in various investments by the EPF or, in some cases, by the members themselves.


There are several benefits to contributing to the EPF, namely:

The EPF, by law, has a minimum dividend rate of 2.5%, but historically has had a much higher rate. For example, in 2014, the dividend rate was 6.75%.

Your EPF contributions are deducted from your income tax - up to a maximum of RM6,000 per annum.


At the age of 50, Malaysian citizens and permanent residents are allowed to withdraw up to 30% of their savings, and at the age of 55 they can withdraw their full savings.

A full withdrawal can also be made in the event that an EPF member immigrates or becomes disabled.

Foreigners who opt to contribute to the EPF may withdraw their funds when they have terminated their employment and are about to leave the country.

Do I need Kakitangan.com to help me calculate?

Yes. The rate in the Jadual is not that straight forward.

It has been a myth that how we actually calculate EPF amount for our employee.

To our understanding, if my salary is RM3,801, what is supposed to be the 8%?
RM3,801 * 8% = RM304.08.

Correct right? I used calculator, excel and whatever way I do, it’s RM304.08.

I happily pay this amount to EPF via the bank counter for a couple months, and BANG: EPF found that it’s wrong, sends me a letter and ask me to do all the payback (which is a nightmare for such tiny amount month by month of all my employees)!

The actual to be paid is RM306. Not RM304.08. It’s kind of a rounded figure in a range.


So I learn my lesson – it has to be Jadual, or it’s so difficult to check for everyone, we use a payroll system like Kakitangan.com to populate for us.

Hope it helps!

Note: another issue we always see - before using Kakitangan.com many customers actually deduct more than RM500 (e.g. RM632) in EPF for PCB calculation. Which is wrong too. According to LHDN, the maximum you can do so is RM500 a month.

The exact wording:-
"Employer whose compute PCB using the schedule of MTD shall base on gross taxable remuneration less EPF (inclusive EPF for non taxable remuneration/allowance) limited to RM500 per month if the actual deduction exceeds RM500. "