Private sector employees and non-pensionable public sector employees contribute to the provident fund, with social assistance paid to those with insufficient income.
Pensions at a Glance Asia/Pacific 2024

Malaysia
Copy link to MalaysiaMalaysia: Pension system in 2022
Copy link to Malaysia: Pension system in 2022Key indicators: Malaysia
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Malaysia |
OECD |
||
---|---|---|---|
Average worker earnings (AW) |
MYR |
38 544 |
181 548 |
USD |
8 760 |
41 261 |
|
Public pension spending |
% of GDP |
7.7 |
|
Life expectancy |
at birth |
77.0 |
81.3 |
at age 65 |
82.5 |
85.0 |
|
Population over age 65 |
% of working- age population |
12.4 |
32.6 |
Qualifying conditions
The normal pension age is 55, but retirement is not necessary.
Benefit calculation
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.
Variant careers
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.
Personal income tax and social security contributions
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:
Chargeable income |
Rate |
---|---|
0 – 5 000 |
0% |
5 001 – 20 000 |
1% |
20 001 – 35 000 |
3% |
35 001 – 50 000 |
8% |
50 001 – 70 000 |
14% |
70 001 – 100 000 |
21% |
100 001 – 250 000 |
24% |
250 001 – 400 000 |
24.5% |
400 001 – 600 000 |
25% |
600 001 – 1 000 000 |
26% |
1 000 001 – 2 000 000 |
28% |
2 000 001 and above |
30% |
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.
Pension modelling results: Malaysia in 2055 retirement at age 55 (men)
Copy link to Pension modelling results: Malaysia in 2055 retirement at age 55 (men)
Note: Real rate of return 2.5%, real earnings growth 1.25%, inflation 2%, and real discount rate 1.5%. All systems are modelled and indexed according to what is legislated. Transitional rules apply where relevant. DC conversion rate equal 90%. Labour market entry occurs at age 22 in 2022. Tax system latest available: 2022.
Source: OECD pension model.