• Tek Siong, Hock

How to Calculate EPF (KWSP) Formula

Updated: Dec 31, 2021

If you are interested to know the calculation of the EPF contribution formula, you have came to the right place.

In the event you are looking for ERP system with an affordable HR Payroll, read this "HR Payroll for Malaysia".

  1. Standard Employer EPF Rate is 13%, if the Salary is less than RM5,000, while 12% if the Salary is more than RM5,000. Since 2020, the default Employee Contribution rate is 9%, but employee is free to opted for 11%.

2. Salary may includes commission, allowance, bonuses, etc, but does not includes the Overtime. Check the KWSP page for the details.

3. Let say if your basic salary is RM4,500, then Employer EPF rate is 13%, if there is a 1 month bonus of RM4,500, but the Employer EPF rate is still at 13%, because the rate is not affected by Bonus and Director fee. So the Employer EPF rate is (RM4,500 + RM4,500) X 0.13 = RM1,170

4. EPF rate is not a direct "Salary multiply X%", if salary is less than RM20,000, but follow a contribution rate table. Eg, if the salary is RM3,550:

a) Employer EPF rate will be rounded up to RM3,560. RM3,560 X 13% = RM462.8 = RM463 (ceiling to the nearest integer).

b) Employee EPF rate will be rounded up to RM3,560. RM3,560 X 11% = RM391.6 = RM392 (ceiling to the nearest integer).

See this table from the KWSP

5. If Salary is over RM20,000, eg RM21,110, it will be a direct "Salary multiply X%".

a) Employer EPF rate - RM21,110 X 12% = RM2,533.2 = RM2,534 (ceiling to the nearest integer).

b) Employee EPF rate - RM21,110 X 11% = RM2,322.1 = RM2,323 (ceiling to the nearest integer).

6. This is a Tax-Saving tip. You may increasing Employer EPF rate, up to 19% (maximum allowable), as oppose to increasing your salary, which means that while your total income is actually risen, but you are paying at the old PCB (MTD) rate.

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