Starting 1 October 2025, Malaysia will make it compulsory for foreign employees to contribute to the Employees Provident Fund (EPF). Under this new rule, both employers and foreign employees will contribute 2% of the employee’s monthly wages.

This change follows the passing of the Employees Provident Fund (Amendment) Bill 2025 in Parliament earlier in March. The aim is to expand social protection to all workers in Malaysia while ensuring long-term business sustainability.

Current EPF Contribution Rules

The EPF is Malaysia’s retirement savings and pension scheme, managed by the EPF Board under the Ministry of Finance. At present, contributions are only mandatory for Malaysian employees, with workers contributing 11% and employers contributing 12% or 13%. Foreign employees may contribute voluntarily, but it has not been compulsory.

What Will Change from October 2025

From October, all foreign employees with valid employment passes will be required to make EPF contributions.

The only exception is for domestic workers such as maids, cooks, and cleaners.

1. Employers and foreign employees will each contribute 2% of monthly wages.
2. Foreign employees may apply to withdraw their EPF savings when they leave Malaysia permanently, for example, when their work permit ends.
3. Employers must register with EPF and update their payroll systems to meet the new requirements. Registration can be done online or at any EPF office.

Impact on Employers

Although the 2% contribution rate is much lower compared to Malaysians, the new rule will still raise costs for businesses that hire foreign workers. Employers are advised to:

1. Review internal policies and employment contracts
2. Adjust payroll systems to reflect the new contributions
3. Budget for the additional labor costs
4. Communicate the changes to affected employees

Next Steps for Employers

On 25 June 2025, EPF announced that it will launch a dedicated webpage to provide detailed implementation guidelines, FAQs, and updates. Employers should prepare for the changes but may want to wait for these official guidelines before finalizing their internal updates.