Malaysia: Proposed amendments to the Employees' Provident Fund Act 1991

07 Apr 2025    2 minute read

In brief

The Employees Provident Fund (Amendment) Bill 2025 ("Bill"), passed by the Senate (Dewan Negara) on 24 March 2025, proposes important changes to the Employees Provident Fund Act 1991 ("Act"). Notably, the Bill mandates contributions to the Employees' Provident Fund (EPF) by employees who are non-Malaysian citizens (excluding permanent residents), at a rate of contribution equivalent to 2% of the employees' monthly wages, payable by both the employer and employee. 

Contents

Mandatory EPF contributions for non-citizen employees

Prior to the proposed amendments, non-citizen employees below the age of 60 had the option to elect to contribute to EPF, Malaysia's statutory retirement savings scheme. The contribution rates for non-citizen employees are currently set at 11% of their monthly wages, with their employers contributing a nominal amount of RM5 per month. 

The Bill proposes amendments to make EPF contributions mandatory for non-citizen employees. A non-citizen employee is defined within the Bill as an individual whose country of domicile is outside Malaysia and who enters and remains temporarily in Malaysia under the authority of any pass issued under the immigration laws of Malaysia. 

The proposed legislation requires non-citizen employees to contribute 2% of their monthly wages to EPF, with employers contributing an additional 2%. 

Non-citizen employees who voluntarily elected to contribute to EPF on or after 1 August 1998 will automatically transition to the amended contribution rate upon the Act's commencement. This means that, from the date the amended Act comes into effect, these employees will contribute 2% of their monthly wages, with an additional 2% contribution from their employers.  

Conditions for EPF withdrawal by non-citizen employees

The Employees' Provident Fund Board ("Board") may authorize the withdrawal of funds contributed by a non-citizen employee if any of the following conditions are met:

  • The employee has passed away. 
  • The employee is physically or mentally incapacitated and as a result, is unable to engage in employment. 
  • The employee is about to leave Malaysia permanently and has no intention of returning. 
  • The employee has attained the age of 55 years.

Next steps

As the Bill has been passed by the Senate, it will be submitted for Royal Assent and subsequently gazetted into law. Although there is currently no fixed date for the implementation of these amendments, according to the Malaysian government, they are expected to take effect in the fourth quarter of 2025.1 

No grace periods have been announced to date (although there have been calls by the manufacturing sector for deferred implementation2), and as such, it is crucial for employers to start preparing for the implementation of these amendments.    

1 The Star, "Foreign workers' mandatory EPF likely to be in Q4" (7 March 2025).

2 The Edge Malaysia, "Manufacturers seek one-year deferment of 2% EPF contribution for foreign workers" (23 March 2025).

* * * * *

Shernia Kong, Legal Assistant, has contributed to this legal update.

LOGO Malaysia_Wong & Partners_KualaLumpur

© 2025 Wong & Partners. All rights reserved. Wong & Partners, member of Baker & McKenzie International. This may qualify as "Attorney Advertising" requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.

Contact Information
Trishelea Ann Sandosam
Partner
Kuala Lumpur
Read my Bio
trishelea.sandosam@wongpartners.com

Copyright © 2025 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.