The Employees Provident Fund (EPF) will introduce two new initiatives effective 1 Feb 2008 to help improve the employment prospects of members above the age of 55 and to enhance financial security of all members upon retirement.
For the first initiative, a person who continues to work after attaining 55 years of age is required to continue making contributions to the EPF until 75. However, the monthly contributions by the employer and the worker will be halved to 5.5 percent (employee) and six percent (employer). Nevertheless, members above 55 years and their employers could choose to contribute more than the statutory rate.
Those who fail to contribute will be charged under Section 43(2) of the Employees Provident Fund Act and can be fined a maximum of RM10,000 or up to three years’ jail or both upon conviction.
According to EPF deputy chief executive officer (operations) Ibrahim Taib, this move would encourage members to work after 55 years and enhance their retirement savings. Members would also benefit from the yearly dividends. However, members must withdraw their entire savings at 75 years or else the amount would be categorised as “unclaimed monies” at the age of 80.
The lower rates of contribution do not apply to employees who are already above 55 years and are currently working and who have not withdrawn their contributions as at 55. These workers and their employers will continue to make contributions at the existing rates (a total of 23 per cent).
According to him, the EPF has about 601,000 members above 55 years with a total sum of RM10.4 billion of which only 84,000 with a total sum of RM7.1 billion are still working.