As of 2025, what is the employer's EPF contribution rate for an employee earning RM4,500 a month?

13%. The study guide states that for monthly wages of RM5,000 and below the employer contributes 13%, and for wages above RM5,000 the employer rate is 12%; the employee rate is 11%.

Which statement about the EPF's minimum dividend is correct?

At least 2.5% on conventional savings, but not Simpanan Shariah. The study guide states that EPF is legally obliged to provide a yearly dividend of 2.5% on conventional savings, while Simpanan Shariah returns depend on actual Shariah-compliant investment performance.

What are the contribution rates under LTAT's Superannuation Scheme?

Members 10%, government 15%. Serving armed forces members contribute 10% of monthly salary to LTAT and the government, as employer, contributes 15%. The 17.5% figure relates to the government's contribution to KWAP.

7B.3 Key Players: EPF, KWAP, LTAT, Employer- | Free Guide 2026

The Employees Provident Fund (EPF)

The EPF helps employees save for retirement from a share of their monthly salary, with employers adding their own contribution.

Feature	Detail (study guide, 2025)
Contribution rates	Employee 11%; employer 13% for monthly wages of RM5,000 and below, 12% above RM5,000, so an employee saves at least 23% of salary each month
Voluntary top-ups	Members can choose a higher rate than 11%; extra contributions may not attract tax relief if they exceed the relief limit
Minimum dividend	By law at least 2.5% a year on conventional savings; not applicable to Simpanan Shariah, whose dividend reflects actual Shariah-compliant investment performance
Dividend timing	Dividends are declared after the year end; there is no daily NAV, because contributions are commingled
Investments	Mainly Malaysian Government Securities and other fixed income (including loans), plus equities and overseas assets
Member choice	Members cannot choose the asset class, manager or fund mix, except partly through EPF-MIS (section 4.6)
Coverage	Tied to employment: the self-employed are not covered unless they contribute voluntarily

EPF accounts: EPF restructured its accounts in 2024, so retirement savings now sit in Akaun Persaraan (formerly Account 1), alongside other accounts for specific withdrawals, and members aged 55 and above have Akaun 55 and Akaun Emas. The study guide's EPF withdrawal table uses the older account names; check EPF's current rules before advising on withdrawals.

i-Saraan (formerly the 1Malaysia Retirement Savings Scheme) lets self-employed people save for retirement through EPF. Like other EPF members, they cannot choose how their contributions are invested.

EPF and PRS together

EPF and PRS contributions are not interchangeable: money stays in the scheme it was paid into and each is managed separately.
EPF members are encouraged to use PRS if their EPF savings are insufficient.
Employers can use PRS as an extra benefit to attract talent; PRS complements mandatory provision.

Feature	EPF	PRS
Mandatory?	Yes, for private sector employees	No, voluntary
Choice of manager and funds	No	Yes, competing providers and funds
Pricing	Annual dividend	Daily NAV
Minimum return	2.5% on conventional savings	None
Self-employed	Only through voluntary contributions such as i-Saraan	Yes

Kumpulan Wang Persaraan (Diperbadankan) (KWAP)

The civil service pension scheme, established under the Pensions Ordinance of 1951, pays eligible retired civil servants a monthly pension based on a percentage of their last salary.
The government set up the Pensions Trust Fund in 1991 with a launching grant of RM500 million to help fund this liability.
KWAP was established on 1 March 2007 to replace the Pensions Trust Fund. The government contributes a minimum of 17.5% of each civil servant's salary each month; civil servants contribute nothing, as it is a defined benefit plan.
KWAP's objective is to achieve optimum returns to help the government finance its pension liability.

Lembaga Tabung Angkatan Tentera (LTAT)

Established in August 1972 by an Act of Parliament.
Provides retirement and other benefits to armed forces members (compulsory contributors) and lets officers and mobilised volunteer-force members save.
Secondary aims: socio-economic development and welfare for retiring and retired personnel.
Under its Superannuation Scheme, members contribute 10% of monthly salary and the government, as employer, contributes 15%.

Employer-Sponsored Retirement Schemes

Feature	Detail
Purpose	Employee loyalty and corporate responsibility: extra pension funded by the employer above EPF
Approval	Must be approved under section 150 of the Income Tax Act 1967
Tax	Employer contributions are usually tax-exempt up to a limit, currently a maximum of 19%
Vesting	Contributions vest immediately but can only be enjoyed at retirement, like EPF
Governance	Established by trust deed and fund rules; usually managed in-house by a board of trustees
Key conditions	Contributions alienated to the trustees; benefits paid only at retirement at 55, early retirement through illness, death or permanent departure from Malaysia; investment policy set by the Inland Revenue Board
Trend	Losses in past crises and high administration costs have led many employers to move schemes into EPF

These schemes are open only to employees of the company or group.

Annuities

Annuities, sold by insurers with tax incentives, pay the annuitant a series of fixed payments (usually monthly) until death. Each payment is part of the purchase price plus interest. The price can be paid as a lump sum or, for retirement saving, over the working years; stopping contributions disrupts the plan. If an annuity is cancelled, the annuitant may get back contributions less administrative and other charges and must start again.

FIMM Combined Examination

7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities

Key Takeaways