The normal pension age is 55, but retirement is not necessary.

Defined contribution

Employees pay 11% of monthly earnings to the provident fund according to wage classes, when aged up to age 60, and 0% thereafter. Employers pay 13% of monthly earnings according to wage classes for employees up to 60 years of age and earning under RM 5 000 per month, and 12% for earnings above. Employer contributions are 4% for those aged 60 to 75. There is no ceiling for the contribution.

For those aged under 55 the contribution is made to two different accounts: 70% to Account 1 (retirement) and 30% to Account 2 (education, home purchase, certain critical illnesses and other approved expenses). Once reaching age 55, Accounts 1 and 2 are consolidated into a single account (Akaun 55), and a separate account (Akaun Emas) is created for contributions made after age 55.

It is possible to receive pension in a lump sum, monthly instalments or a combination of both. The minimum total amount to be paid in monthly instalments is RM 250 for at least 12 months, with a minimum withdrawal at any time of at least MYR 2 000, or a combination of these options. For comparison with other countries, the pension is shown as a price‑indexed annuity based on sex-specific mortality rates.

The guaranteed minimum interest rate is 2.5% a year. If funds remain in the accounts after age 55, fund members continue to earn compound interest until age 100.

Old-age assistance

A monthly benefit of RM 350 is paid to those aged 60 and assessed as needy (below poverty line), with no financial support from other family members.

Early retirement

It is possible to make a one‑time withdrawal of savings at age 50 from Account 2.

Late retirement

It is possible to defer retirement and continue to make contributions after normal pension age.

Taxation of workers

Mandatory and voluntary provident fund contributions up to RM 6 000 a year are tax deductible.

Taxation of worker’s income

Individuals have a personal tax allowance of RM 9 000 per year with additional income taxed as follows:

Social security contributions payable by workers

In addition to the EPF contribution employees below age 55 pay 0.5% and 0.2% of earnings up to RM 5 000 a month to be covered by social insurance and the Employment Insurance System respectively. The social insurance does not cover old-age pension, but disability, survivor and other pensions and grants.

Taxation of pensioners

There is no additional tax relief for pensioners.

Taxation of pension income

Pension income is tax exempted.

Social security contributions payable by pensioners

Pensioners do not pay any social security contributions.