The Employee Provident Fund (KWSP) is the fundamental support of the Malaysian pension system. It provides extensive social security functions and is similar to the Singapore system. Recent reforms have enhanced financial security in retirement through incentives that encourage longer contribution. The primary aim is to provide a measure of security for old age retirement to its members. It also provides supplementary benefits to members to utilize part of their savings for house ownership and other withdrawal schemes.
Occupational pensions are not widespread and are limited to large employers.
All employees in Malaysia who are 16 and over, employed under a contract (whether oral or in writing), must be registered for the Employees Provident Fund.
An employer will contribute 12% of the employee's wages and the employee contributes 11% of the monthly wages towards the employee's account.
All foreign workers and expatriates earning less than RM2,500 per month are also required to contribute to EPF (with some exceptions). Unlike the employer contribution benefits for Malaysian citizens, an employer in Malaysia is only obliged to contribute a minimum of RM5.00 per month to a foreigner's EPF account regardless of salary.
The official EPF portal at is www.kwsp.gov.my.
International companies commonly have private pension plans that their employees can pay into, regardless of their current location. It is much less likely to be covered through a local Malaysian company. Review the details of this plan (eligibility, claim process etc.) with your particular company before departing.
Some countries have a bilateral agreement with Malaysia that allow for years worked in Malaysia to count to their State pension. For example, the U.S. Internal Revenue Code allows certain U.S. taxpayers to deduct, from gross income, annual contributions to qualified retirement plans. Many U.S. expats use this to save for retirement. Inquire with your state plan about the particulars.
If your country does not allow for years worked in Malaysia to count toward your state pension, there may be an opportunity to buy back time once you have returned to your home country and are once again contributing to the pension plan. Again, inquire with your state plan about the particulars.
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