Malaysia will implement new mandatory contributions to the Employees Provident Fund (EPF) for foreign employees, starting 1 October 2025. Both employers and foreign employees will be required to contribute 2% of monthly wages each.
Background
The Employees Provident Fund (Amendment) Bill 2025 (the “Bill”) was passed by the Parliament of Malaysia in March 2025 and will take effect on 1 October 2025. The Bill aims to extend social protection to all workers while balancing business sustainability.
The EPF is a retirement savings and pension scheme for employees in Malaysia, managed by the EPF Board under the Ministry of Finance. Currently, EPF contributions are mandatory only for employees who are Malaysian citizens, with employee contributions at 11% and employer contributions between 12% and 13%. Foreign employees may voluntarily contribute but are not required to.
Key details
Starting 1 October 2025, EPF contributions will be mandatory for all non-Malaysian citizen employees holding valid employment passes, except domestic servants such as maids, cooks and cleaners. Both employers and foreign employees must contribute 2% of monthly wages each.
Foreign employees will be able to apply for withdrawal of their EPF contributions if they are about to leave Malaysia permanently, such as when their employment passes expire and their employment in Malaysia has ceased.
Employers must register themselves with the EPF to comply with the new contribution requirements for foreign employees. Registration can be completed online at the EPF website here (opens a new window) or at any EPF office in Malaysia.
Employer action: ACT
Although the 2% contribution rate for foreign employees is significantly lower than the rate for Malaysian citizens, the new requirement will increase labor costs for employers who hire foreign employees.
Employers should review and update internal EPF policies, payroll systems, employment contracts, and collective agreements, and take other necessary steps to implement the new mandatory contributions for foreign employees. This includes registering with the EPF, budgeting for the additional labor costs, and communicating the changes to affected foreign employees.
The EPF announced on 25 June 2025 that it will soon launch a dedicated webpage providing implementation guidelines, frequently asked questions, and updates. Employers are encouraged to prepare for the changes but may wish to wait for this guidance before finalizing updates to documents and processes.
Further Information
