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PETALING JAYA: Members of the Employee Provident Fund (EPF) who wish to keep their monthly contribution at 11% must inform EPF of their intention, says a source.
During the presentation of the 2021 Budget, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said that the statutory contribution rate of employees to the EPF would be reduced from 11% to 9%.
The reduction, aimed at boosting the disposable income of EPF taxpayers, takes effect in January 2021.
One source said that employees could do so through their employers, who would send a list to EPF of those who have chosen to keep their contribution at 11%.
“The choice is theirs. They can choose not to participate by informing EPF. They will be allowed to contribute in full but they must sign a special form indicating that they want to increase the contribution to 11%, similar to previous years, failing which EPF will automatically implement the mandatory cut to 9% ”.
It is understood that EPF is working out a timetable with employers to present the list of those who refused to participate in the scheme.
This is not the first time EPF has allowed its members to opt out of reduced contribution percentages.
In September, EPF reported that at least 54% of its members, or 7.9 million of the 14.6 million 54-year-old contributors, have savings of less than RM 50,000 for retirement.
Of the 14.6 million taxpayers, about 7.36 million are still active. To date, the EPF has managed a fund of RM940bil.
EPF has always paid more than 5% in dividends in the last 12 years, except in 2008, when the global financial crisis generated a payment of 4.5%.
In February, when then-Prime Minister Tun Dr Mahathir Mohamad announced the 2020 Economic Stimulus Package to mitigate the impact of Covid-19, the EPF contribution rate of statutory employees was reduced from 11% to 7% from April to December 2020.
Although it was an automatic reduction, members had the option to opt out by informing EPF by signing a special form to keep their contribution at 11%.
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