Summary

The central part of the Malaysian Social Security system is a provident fund (the EPF) which is primarily designed to deliver benefits that can be withdrawn at retirement age or in a limited range of other circumstances. There are also minor schemes which provide employment injury, invalidity benefits and unemployment insurance which generally only apply to Malaysian citizens and permanent residents. The EPF is essentially a mandatory personal retirement savings scheme, and is voluntary for non-permanent residents of Malaysia.

Legislation which extended EPF to foreign employees of Malaysian companies (at a rate of 2% each for employees and employers) came into effect in October 2025.

Details

Contributions

For all employees who earn more than approx. $1,275 per month, the employer EPF contribution rate is 12%, and the employee rate is 11%. No further contributions are due if the total amount contributed to an individual’s EPF in one year exceeds RM100,000 (about $25,500).

Treaties

Malaysia does not have International Social Security treaties to eliminate double social security charges. However, because of the voluntary nature of the EPF for expatriates working in Malaysia, double charging rarely arises at the moment. The extension of EPF to foreign employees only applies to foreign local hires rather than expatriates, and these employees are unlikely to have a foreign social security charge on their Malaysian earnings.

Exemptions

Individuals who are not domiciled in Malaysia (i.e. non Malaysian citizens) and who work for non-Malaysian companies can elect not to contribute to the EPF. In practice, few non-Malaysians have historically participated in the scheme, although this will change from 2025 onwards.

Administration

The EPF is operated through Malaysian payroll so generally creates no administrative burden for individuals. Foreign companies hiring Malaysian nationals have to pay EPF if they are registered in Malaysia.

Benefits

The central benefit of the EPF is a lump sum withdrawal of accrued savings upon reaching retirement age. Withdrawals can also be made for house purchase, incapacity and educational reasons. The EPF does not provide the benefit cover of a comprehensive social security system.

Other

EPF contributions are tax deductible for individuals.

Despite the extension of EPF to foreign local hires of Malaysian businesses, due to low rates of contribution, moving to Malaysia on a local contract can substantially reduce the overall social tax burden.

Foreign nationals permanently departing Malaysia (and Malaysians permanently departing and renouncing their citizenship) can withdraw their accrued EPF contributions even if they haven’t reached retirement age.

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