KUALA LUMPUR, Feb 27 — The minimum contribution rate under the Employees Provident Fund (EPF) will be cut from 11 per cent to 7 per cent from April 1 until December 31 this year with the aim of potentially unlocking up to RM10 billion worth of spending by Malaysians to help drive the economy that has been hit by the global Covid-19 virus outbreak.
But Interim Prime Minister Tun Dr Mahathir Mohamad also said Malaysian employees “have the option to opt out from the scheme and maintain their contribution rate” for their retirement savings at 11 per cent.
In his announcement of an economic stimulus package today, Dr Mahathi said Malaysians receiving cash aid under the Bantuan Sara Hidup (BSH) scheme will receive a RM200 payment in March, two months earlier from the earlier scheduled payout date of May.
They will also receive more cash aid, with an additional RM100 to “be paid into the bank accounts of all BSH recipients in May 2020”.
“Subsequently, an additional RM50 will be channelled in the form of e-tunai,” he said.
Besides boosting local spending to help cushion the economic fallout from Covid-19, Dr Mahathir said the government will also try to help Malaysians earn more money through online selling and lower their living costs.
He said Bank Negara Malaysia will provide RM1 billion of agrofood facility at 3.75 per cent interest cost to promote food production activities for both domestic and export demand, while the government would allocate RM10 million to the Federal Agricultural Marketing Authority to provide food storage facilities to help reduce food prices.
Dr Mahathir said 10,000 local entrepreneurs will also get grants of RM1,000 each to promote the sale of their products on e-commerce platforms, and with the Malaysian Digital Economy Corporation to get a RM20 million allocation to transform Pusat Internet Desa into e-commerce hubs.
Dr Mahathir noted these measures were necessary as the Covid-19 disease still had a significant impact on the global economy and Malaysia despite it being well-contained locally.
Malaysia has had 22 cases of infections and zero fatalities as at February 26. Twenty have fully recovered and been discharged, leaving only two left hospitalised but in stable conditions.
The correct EPF deduction
In an immediate response, the EPF said the government’s decision to reduce the minimum statutory contribution rate for employees to 7 per cent will affect EPF members aged below 60, noting however that the EPF rate by employees for those aged 60 and above will remain at zero per cent.
“The move to reduce the statutory contribution rate is part of the Government’s economic stimulus package intended to cushion the blow from the economic fallout following the global Covid-19 outbreak,” the retirement fund for employees in the private sector said in a statement today.
EPF said employers are required to ensure the correct amount is deducted from their staff’s salaries for the EPF contribution, further noting however that Malaysian workers could opt to continue their current rate of deductions for retirement savings.
The pension fund said employees may choose to maintain the current contribution rate of 11 per cent by completing the form “Notis Pilihan Mencarum Melebihi Kadar Berkanun KWSP 17A (Khas)” available on its website.
“This notice must be presented to employers to be submitted to the EPF,” it said.
EPF said those who require more information could visit any EPF branch, or its website, or call the EPF Contact Management Centre at 03-8922 6000.