Working in Kuala Lumpur?
Social Security for Expats in Kuala Lumpur
The System of Social Security
The two pillars of the Malaysian Social Security System are the Employees Provident Fund and the Social Insurance System. The latter administers benefits under two schemes, the employment injury scheme and the invalidity scheme.
The Provident Fund is made up of two individual mandatory accounts per person, both of which receive monthly contributions from the employee and the employer alike. The money in both Provident Fund accounts is used to pay for old-age, disability and survivor benefits when the employee becomes unfit for work or reaches the age of 55. This is the point when he or she may withdraw all funds.
Leaving Country Withdrawal
Before an employee reaches the age of 55, Provident Funds can only be used for government-approved purposes. These can be investment in unit trusts (account no.1) or the purchase of property, paying for education costs, or for the treatment of one of the designated critical illnesses (account no.2).
There is one exception: If you have contributed to the Employees Provident Fund during your time as an expat in Kuala Lumpur, you can withdraw all your funds upon leaving Malaysia. To find out whether you are eligible for a so-called Leaving Country Withdrawal, please fill in the relevant forms provided on the web portal of the Employees Provident Fund and submit them.
Social Security Coverage
Social Insurance is compulsory for all non-foreign employees up to the age of 55 earning more than 3,000 MYR per month. Employee contributions are calculated at 0.5 % of the employee’s monthly wage class earnings, matched by the employer with 0.5% of the monthly payroll. There are 24 different wage classes in Malaysia.
As a private sector employee in Malaysia, you automatically become a member of the Employees Provident Fund. Self-employed persons, domestic workers and foreigners can opt for voluntary coverage.
Minimum contributions to the fund are 11% of the employee’s monthly earnings until he or she reaches the age of 55, and 5.5% thereafter. The employer pays an additional 12% of the employee’s salary into the fund, or 6% once the employee has passed the age of 54. All contributions are split according to the following principle: 70% go into account no.1, 30% into account no.2.
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