Malaysia EPF Guide 2026: Contribution Rates, Accounts, and Withdrawals
Last updated: 2026-07-16
Quick Answer
EPF (Employees Provident Fund), known locally as KWSP, is Malaysia's mandatory retirement savings scheme. Employees contribute 11% of monthly wages and employers add 12% to 13% as of 2026. Savings earn annual dividends and can fund retirement, housing, and healthcare withdrawals. Rates as of 2026. Verify with official sources before acting.
EPF (Employees Provident Fund), known in Malay as KWSP (Kumpulan Wang Simpanan Pekerja), is Malaysia's mandatory retirement savings scheme for private-sector employees and self-employed individuals. This guide covers the 2026 contribution rates, how the accounts work, when you can withdraw, your investment options, the tax relief available, and how EPF compares with private retirement schemes and Singapore's CPF. To see the impact on your take-home pay and tax, use the Malaysia income tax calculator.
What Is EPF?
EPF is a defined-contribution scheme. Both you and your employer contribute a fixed percentage of your monthly salary to accounts held in your name. The money is invested by EPF and earns an annual dividend. You cannot draw on most of the funds until retirement, though withdrawals for specific purposes are permitted earlier.
EPF membership is compulsory for Malaysian citizens and permanent residents employed in the private sector. Foreigners employed in Malaysia are not mandatorily covered but may contribute voluntarily. Government employees are covered by KWAP (Kumpulan Wang Persaraan), a separate pension scheme.
What Are the EPF Contribution Rates in 2026?
Contribution rates depend on the employee's age and salary level.
| Employee Age | Employee Rate | Employer Rate (salary above MYR 5,000) | Employer Rate (salary MYR 5,000 and below) |
|---|---|---|---|
| Below 60 | 11% | 12% | 13% |
| 60 and above | 5.5% | 6.5% | 6.5% |
For most working Malaysians earning more than MYR 5,000 per month, the combined EPF contribution is 23% of salary (11% employee plus 12% employer). For salaries at or below MYR 5,000, the combined rate is 24% (11% plus 13%). These are deducted directly from payroll and remitted to EPF each month, per KWSP's mandatory contribution rules. Contributions are calculated using the fixed brackets in the Third Schedule of the EPF Act, not a flat percentage, except for wages above MYR 20,000 which use the exact rate. Note that since 1 October 2025, EPF became mandatory for foreign workers, with employer and employee each contributing 2%. Rates as of 2026. Verify with official sources before acting.
Compared with Singapore's CPF, where the combined rate for employees under 55 is 37%, Malaysian workers retain a higher proportion of their gross salary each month. The tradeoff is a lower mandatory retirement savings accumulation rate.
How Is EPF Split Across Accounts 1, 2, and 3?
Historically, EPF contributions were split between two accounts: Account 1 (Akaun Persaraan) received 70% and Account 2 (Akaun Sejahtera) received 30%. Account 1 was locked until age 55; Account 2 could be accessed earlier for approved purposes such as housing, education, and medical treatment.
In May 2024, EPF introduced a third account called Akaun Fleksibel, restructuring how new monthly contributions are allocated, according to KWSP's account restructuring notice:
- Akaun Persaraan (Retirement Account): 75% of contributions, locked until age 55
- Akaun Sejahtera (Wellbeing Account): 15% of contributions, for housing, education, and healthcare withdrawals
- Akaun Fleksibel (Flexible Account): 10% of contributions, available for withdrawal at any time with no restrictions
The Akaun Fleksibel balance can be withdrawn once per month with no minimum or maximum restriction. This provides a degree of liquidity that the old 2-account structure did not.
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Can You Withdraw From EPF Before Age 55?
From Akaun Sejahtera (Account 2), you can withdraw for the following approved purposes:
- Housing: Purchase of a residential property, reduce or settle a home loan, or construction of a house
- Education: Fees for yourself or a dependent at an approved institution of higher learning
- Medical: Treatment for critical illness as defined by EPF, for yourself, spouse, or child
- Incapacitation: Full withdrawal if certified as permanently incapacitated
From Akaun Fleksibel, you can withdraw any amount at any time by applying through the i-Akaun portal or EPF branches. No reason is required.
What Happens to Your EPF at Age 55 and 60?
At age 55, EPF members can make a lump sum or partial withdrawal from all accounts. You can also choose to leave funds in EPF, where they continue to earn dividends at the same rate. Many members withdraw only a portion at 55 and leave the rest to grow.
At age 60, members can make a full withdrawal of all remaining EPF savings. The funds become accessible with no restrictions at that point.
How Much Does EPF Pay in Dividends?
EPF invests contributions in equities, bonds, real estate, and infrastructure. Each year, EPF declares a dividend rate based on investment performance. For 2024, EPF declared a dividend of 6.30% for both Simpanan Konvensional (conventional savings) and Simpanan Shariah, and for 2025 it declared 6.15% for both, according to KWSP's official dividend announcements. Rates vary annually and are not guaranteed.
The dividend compounds annually on your total EPF balance. A member with MYR 100,000 in EPF earning a 6% annual dividend adds MYR 6,000 that year before further contributions. Rates as of 2026. Verify with official sources before acting.
Compare EPF and CPF side by side. See how Singapore's CPF allocates contributions across OA, SA, and Medisave with the CPF contribution calculator, then compare your Malaysia take-home pay using the Malaysia income tax calculator.
What Tax Relief Do You Get for EPF Contributions?
EPF employee contributions qualify for income tax relief in Malaysia under the combined EPF and life insurance relief category. The combined cap is MYR 7,000 per year.
This means your EPF contributions (up to MYR 4,000) and life insurance premiums (up to MYR 3,000) can be claimed together, up to a total of MYR 7,000. If your EPF contributions alone exceed MYR 4,000, the full amount up to MYR 7,000 can still be claimed, displacing any life insurance component.
For a worker in the 13% bracket, the full MYR 7,000 relief saves approximately MYR 910 in tax annually. Rates as of 2026. Verify with official sources before acting.
What Are Your EPF Investment Options?
Beyond the default EPF dividend, members can choose to invest a portion of their Akaun Persaraan savings themselves through the EPF Members Investment Scheme, accessed via the i-Invest platform inside the i-Akaun portal. This lets you place part of your retirement savings into approved unit trust funds and other eligible products in the hope of higher returns than the standard dividend.
The scheme is optional and rule-bound. You can only invest savings in Akaun Persaraan that exceed a set threshold (a basic savings amount that rises with age), and only a capped percentage of that excess can be moved into approved funds. Investing this way carries market risk: your chosen funds can underperform the EPF dividend or lose value, so many members leave their savings in EPF to earn the declared dividend instead. Self-employed Malaysians can also top up their savings voluntarily through the i-Saraan programme, which adds a government contribution within annual limits. Rates as of 2026. Verify with official sources before acting.
How Does EPF Compare With Private Retirement?
EPF is the mandatory base of retirement savings, but Malaysia also has voluntary private options, most notably the Private Retirement Scheme (PRS). Understanding how they differ helps you decide whether to save beyond EPF.
- Compulsion: EPF is mandatory for eligible employees, while PRS and other private plans are entirely voluntary top-ups.
- Returns: EPF pays a single declared annual dividend across a broadly diversified fund. PRS returns depend on the specific fund you choose and are not guaranteed, ranging from conservative to growth-oriented.
- Access: EPF savings are accessible under defined conditions and ages, and PRS similarly restricts pre-retirement withdrawals, typically with a tax penalty on early exit.
- Tax relief: EPF shares the combined MYR 7,000 relief with life insurance, while PRS and deferred annuities have a separate relief of up to MYR 3,000 per year, so contributing to both can widen your total relief.
For most workers, EPF does the heavy lifting and private schemes are a supplement for those who want to save more or diversify. If you are weighing a move across the causeway, the take-home and savings picture differs sharply between the two countries, as covered in our Malaysia vs Singapore salary comparison. Rates as of 2026. Verify with official sources before acting.
How Does EPF Compare With Singapore's CPF?
| Feature | Malaysia EPF | Singapore CPF |
|---|---|---|
| Combined contribution rate (below 55/60) | 23-24% | 37% |
| Employee contribution | 11% | 20% |
| Account structure | 3 accounts | 3 sub-accounts |
| Early withdrawal | Akaun Sejahtera + Akaun Fleksibel | OA for housing and education |
| Returns | Annual dividend (5% to 6% historically) | 2.5% OA, 4% SA/MA (guaranteed) |
| Tax relief on contributions | Up to MYR 7,000 (combined with life ins.) | Mandatory CPF contributions are pre-tax deductions |
The lower contribution rate in Malaysia means workers take home a larger proportion of their gross salary each month. Singapore's higher CPF rate builds retirement savings faster but reduces monthly cash flow. For workers comparing offers in both countries, the CPF deduction is often the largest single factor in take-home pay differences. See the Malaysia vs Singapore working guide for a full take-home pay comparison.
What Else Do People Ask?
What is the EPF contribution rate in Malaysia for 2026?
Employees below 60 contribute 11% of their monthly salary to EPF. Employers contribute 13% for employees earning MYR 5,000 and below, or 12% for salaries above MYR 5,000. Employees aged 60 and above contribute 5.5%, with employers contributing 6.5%.
Can I withdraw from EPF before age 55?
Yes. From Akaun Sejahtera (formerly Account 2), you can withdraw for approved purposes including buying or paying off a home, education fees, and critical illness treatment. From Akaun Fleksibel (introduced in 2024), you can withdraw any amount at any time with no reason required. Akaun Persaraan (retirement account) remains locked until age 55.
How is EPF split across accounts?
Since May 2024, monthly contributions are split: 75% to Akaun Persaraan (locked until 55), 15% to Akaun Sejahtera (for housing, education, healthcare), and 10% to Akaun Fleksibel (flexible withdrawal anytime). Before 2024, the split was 70% Account 1 and 30% Account 2.
What tax relief do I get for EPF contributions in Malaysia?
EPF employee contributions are deductible under the combined EPF and life insurance relief, capped at MYR 7,000 per year. If your annual EPF contributions are MYR 5,500, and you pay MYR 2,000 in life insurance premiums, you can claim MYR 7,000 in total relief (not MYR 7,500, as the combined cap applies).
How does EPF compare with Singapore's CPF?
CPF has a higher combined contribution rate (37% for employees under 55 versus 23-24% for EPF), stricter withdrawal conditions, and guaranteed interest rates of 2.5% to 4%. EPF pays an annual dividend (historically 5% to 6%) and provides more flexible early access through Akaun Fleksibel and Akaun Sejahtera.