Everyone wants to live comfortably when they retire. That is why EPF contribution is so important especially nowadays where inflation is increasing more and more as the years go by.
Thankfully, we have a savings system where all workers from the government and private sectors will be obliged to deduct 9% of their monthly salary for EPF contribution. This is to ensure that at least everyone is saving for their future needs.
The good thing is you won’t really notice it because the money will be automatically deducted from your basic monthly salary.
Let’s explore together more on EPF and other platforms which gives the same benefits as it!
How To Grow Your EPF Savings
1. What is EPF?
EPF stands for Employees Provident Fund. It’s like a savings account for employees in Malaysia. Both the employees and the employers put some money into it from their salary. It is there to help employees have money when they have retired and stopped working.
You can only take out your EPF contributions when you reach the age of retirement which is around 55 years old. If you choose to continue working, you can only take it out when you reach 60 years old and the money will be in “Akaun Emas”.
2. Why is EPF Important?
Retirement Savings
EPF helps employees to save money during their working years for financial support after retirement.
Financial Security
It works as a safety net for employees, providing a source of income to cover living expenses and other needs during retirement.
Long-term Planning
EPF encourages individuals to plan their future by consistently contributing to their savings throughout their working lives.
3. Why you should grow your savings
Good returns
EPF offers competitive annual dividends, usually around 3% to 4% profit annually, which can increase further. The government guarantees a 2.5% dividend for EPF’s conventional savings. These dividends help your savings grow over time, building wealth.
Safe Investment
EPF is a reliable organization that offers secure investment options. It helps you save consistently for retirement, ensuring financial stability in your later years.
Covering Expenses
You can withdraw your EPF savings for various reasons if you meet the conditions. You can use it for housing, education, health, and more. For example, you can use your EPF savings for educational expenses like your tuition fees or PTPTN loans.
Boosted Savings
Your family can also contribute to your retirement savings, helping secure financial future beyond your contributions.
4. How to calculate RM500k in EPF by 60 years old
| Age | Years to Save | Monthly Contribution | Annual Contribution |
| 30 | 30 | RM375 | RM4,506 |
| 40 | 20 | RM937 | RM11.225 |
| 50 | 10 | RM2,836 | RM34,027 |
| 55 | 5 | RM5,762 | RM69,143 |
Here is how you calculate your monthly and annual contributions assuming the annual return rate is 5.50%.
The longer you wait to contribute to your EPF, the more you have to save because you only have a short amount of time to reach RM500k.
That is why you should start saving now!
5. How to put voluntary contributions into EPF
Besides the fixed EPF contribution, you can even add more of your own contributions from your salary. This can help make you save a lot faster than you already are!
It doesn’t matter the amount, even a little bit can help grow your savings big time!
Here is how you can put your voluntary contributions into EPF.
Step 1
Download KWSP i-Akaun from your Apple Store or PlayStore.
Step 2
At the home page, there will be a “Increase Your Savings” button.
Step 3
Enter any amount (minimum RM10) and then you can transfer the funds via FPX.
Fun fact: You can have up to RM83,500 more savings if you add RM100 to your monthly contributions!
6. Other methods to save in EPF
There are also other methods that you can use to save more in your EPF.
i-Invest
Did you know you can spice up your EPF savings by investing in it too? Yes, it’s possible with the Members Investment Scheme (MIS).
If you’ve got some extra cash stashed away, you can transfer a chunk of it from your Account 1 to selected Fund Management Institutions (FMIs) for a little financial adventure.
But here is the twist, you can only put 30% of the excess above your Basic Savings requirement. And guess what? The fun factor depends on your age too. Let me break it down for you.
i-Saraan
i-Saraan is your ticket to topping up your retirement funds. It is perfect for freelancers and gig workers as it lets your put voluntary contribution in your EPF.
What makes it better is you can get extra 15% contribution from the government with up to more than RM250 but it is only applicable for those below 60 years old.
Also, there is no minimum limit on your contributions, you’ll earn your annual EPF dividend on your retirement savings plus a RM2,500 death benefit!
i-Suri
Full-time housewives who don’t earn any income or fixed income, their financial security might be a little tricky. Thankfully, the Kasih Suri Keluarga Malaysia KWSP incentive empowers them in the form of i-Suri.
You can receive a government contribution of RM480 per year, an annual EPF dividend, plus death benefits.
The minimum contribution is RM5 per month or RM60 per year into the EPF account and can be contributed by the wife or the husband to an eligible spouse.
Other low-risk platform
Besides adding your voluntary contributions to your EPF account, there are also other low-risk platforms that has a similar return rate like EPF.
- ASB or ASM – 4%-6% pa
- Versa – 4% pa
- Rize – 4% pa
- Fixed deposits – 3%-3.9% pa
Increase your EPF contribution rate
Did you know you can turbocharge your EPF savings by increasing your contribution rate? Yes, even though the mandatory rate is 11%, you can choose to bump it up for an even bigger savings bank!
You missed the chance to tweak your contribution rate? No worries, just fill out Form KWSP 18A (AHL) and hand it to your employer to make a change.
Besides using EPF to buy a home, you’ve got other options too. Need cash for medical and education expenses? You can make a partial withdrawal to cover those bases.
Interested in buying a home after getting your EPF savings out? IQI can help search for your dream home at the best prices with the best agents!