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Deputy Finance Minister Lim Hui Ying stated that this move will address the risk of inadequate retirement funds whilst providing social protection for foreign workers in the country.
In November 2024, Malaysia’s Employees Provident Fund (EPF) reported a total investment income of RM57.57bn for the nine months ending 30 September 2024.
This aligns with the country's positive outlook for the labour market, which saw employment rise by 1.9% year-on-year, a low unemployment rate of 3.2%, and a stable labour force participation rate of 70.5%. Supporting this growth, EPF welcomed 364,364 new memberships in the first three quarters, reaching a total of 16.1mn members.
In a parallel effort to bolster social protection, according to an article by Business Today, the Ministry of Finance plans to mandate EPF contributions from foreign workers. Speaking on this in the Dewan Negara, in response to a Parliamentary query, Deputy Finance Minister Lim Hui Ying emphasised that this initiative aligns with international labour standards, while also and enhancing Malaysia’s labour market competitiveness.
The Deputy Finance Minister further explained that the proposal aims to secure retirement savings for all workers in Malaysia, regardless of nationality. By addressing the risk of insufficient retirement funds, it ensures social protection for foreign workers and aligns with Article 68 of the International Labour Organisation’s Convention 102, which advocates equal social security rights for non-citizens.
As further cited by Business Today, she also highlighted that this initiative could encourage local businesses to adopt automation, reducing dependence on foreign labour while boosting global competitiveness. To ensure the policy is comprehensive and considers all viewpoints, ongoing stakeholder engagement sessions are being held. Implementation will ultimately depend on amendments to the EPF Act 1991.
In light of these updates, here’s a simplified breakdown of the recent key changes to the EPF framework in Malaysia as of May 2024:
Restructured accounts
The two original accounts (Account 1 and Account 2) are now split into three:
- Akaun Persaraan: For retirement savings.
- Akaun Sejahtera: Supports wellbeing needs during retirement.
- Akaun Fleksibel: Allows withdrawals for short-term needs anytime, with new contributions allocated here after May 2024. Balances from Akaun Sejahtera can be partially transferred to Akaun Fleksibel during an initial opt-in period
Enhanced i-Saraan and i-Suri matching contributions
- i-Saraan: Government now matches voluntary contributions up to RM500 annually for self-employed individuals.
- i-Suri: Housewives under the e-Kasih database receive a 50% government matching incentive (up to RM300 per year)
Shariah-compliant investments:
- EPF portfolios for conventional and Shariah-compliant savings are now fully separated to optimize returns and ensure alignment with ethical and religious principles
i-Invest platform enhancements:
- Members can invest in private mandate portfolios and ESG-compliant products directly via the platform, increasing accessibility and sustainability-focused investment options
READ MORE: Malaysia's EPF expresses support for better retirement wellbeing under Budget 2025
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