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EPF: Employee contribution rate drops to 9% for 2021, opt-out required to maintain 11%

[ UPDATE 1/12/2020 12:00 ]: The EPF has released the Borang 17A (Khas 2021) form. Here’s what you need to do if you wish to retain the 11% employee contribution rate.

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As announced during Budget 2021, the employee contribution rate for the Employees Provident Fund (EPF) will be reduced from 11% to 9% for a period of 12 months from January to December 2021. This is to increase potential cash flow of up to RM9.3 billion.

Source: RTM

According to the EPF’s latest statement, the new statutory contribute rate for employees will be applicable to members below 60-years-old who are liable for contribution. The contribution rate remains unchanged for members aged 60 years old and above.

It also explained that the new rate of 9% will be in effect automatically for the whole year and it affects wages for January 2021 (February 2021’s contribution) to December 2021 (January 2022’s contribution). In case you missed it, the current EPF contribution rate reduction from 11% to 7% under the Economic Stimulus Package will end on the 31st December 2020.

For members who wish to retain the normal 11% contribution rate for 2021, you may fill up the Borang KWSP 17A (Khas 2021) form which will be made available on the EPF website from 1st December 2020. The filled forms must be submitted to the respective employers for online registration via i-Akaun (Employers) which will begin from 14th December 2020. Employers are required to retain the forms received from its employees for their own record.

Also announced during Budget 2021 is the i-Sinar program which allows EPF members who have lost their jobs or suffered reduced income to take out money from Account 1. Eligible members can withdraw up to RM60,000 subject to their current Account 1 balance and applications will open from mid-December 2020.

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The EPF will provide more details about the i-Sinar program this week and members are told not to be fooled by fake i-Sinar apps that are circulating online. All applications must be made directly with the EPF via their online portal or through the official i-Akaun KWSP app.

[ SOURCE , IMAGE SOURCE ]

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Alexander Wong