EPF Contribution Reduced

Employees may soon be able to reduce their Employees Provident Fund (EPF) contributions whereas employers may be allowed to withhold their employees' Social Security Organisation (Socso) contributions as well as their Human Resource Development Fund (HRDF) levy for a specific period.

These are some of the measures expected to be put in place under the Budget 2016 revision to be announced tomorrow.

The government will take steps to boost its revenue and enhance liquidity in revising the budget. One measure to enhance liquidity, which was taken during the last economic crisis, is to allow employees to reduce their EPF contribution. This time around, a reduction of 2% is to be expected.


At present, the minimum contribution by employees and employers is set at 11% and 13% respectively. During the 2008 world economic crisis, the government allowed employees to reduce their contributions but the response was lukewarm. Currently, employees have the option to contribute more than 11% of their salary.

According to the report, the government is also looking at allowing employers to temporarily suspend the submission of employees' Socso contributions.

The above measures can boost individuals' and companies' disposal incomes, thus boosting liquidity.
To further enhance company cashflow, the government may also allow employers' to stop paying HRDF as well as CIDB (Construction Industry Development Board) levies until the economy improves.