EPF Dividend 2022: Conventional Dividend and Shariah Dividend That You Must Know

The Employees Provident Fund (EPF) today announced a dividend of 5.35 percent for Conventional Savings and 4.75 percent for Shariah Savings for the year 2022. These EPF dividend rates are lower compared to the previous year, with 6.10 percent recorded for Conventional Savings and 5.65 percent for Shariah Savings in 2021. The distribution of EPF dividends was announced by its Chief Executive Officer, Datuk Seri Amir Hamzah Azizan, during a financial briefing session of EPF. The total distribution amounted to RM51.14 billion, with RM45.44 billion allocated for Conventional Savings and RM5.7 billion for Shariah Savings.

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4 Important Things to Know About EPF Savings

What is EPF? In general, the Employees Provident Fund (EPF), or Kumpulan Wang Simpanan Pekerja in Malay, is a retirement savings scheme launched by the Malaysian government in 1991. Its purpose is to assist workers in saving for their retirement.

It is considered a low-risk and secure investment with a guaranteed annual dividend rate of 2.5 percent (usually, the EPF dividend rate is announced at a higher rate). In addition to the pension scheme, here are 4 things about EPF savings that can help you understand this retirement scheme:

1. In addition to Employee Contributions, there are Employer Contributions.

Companies in Malaysia are required to contribute a minimum of 13 percent of your gross salary (if your salary is less than RM5,000) or 12 percent (if your salary is more than RM5,000). This means that in addition to the employee contribution rate (either 11 percent or 9 percent), you receive an additional 13 or 12 percent from your employer.

2. Flexible Contribution Rates, Ability to Increase Contribution Amounts.

Despite the government’s reduction of the minimum EPF contribution rate from 11 percent to 9 percent until June 2022, you have the option to increase your contribution amount to a higher rate. In other words, you can contribute as much as you desire or higher than the minimum contribution rate set each month. However, you need to consider the following two risks:

1. Your monthly expenses may be affected, especially if you don’t have any additional sources of income. You may face difficulties in meeting your daily expenses due to a potential shortage of funds.

2. The choice to invest a significant portion of your salary into a single equity carries a high investment risk. You can consider other low-risk investment options in Malaysia, such as Tabung Haji (Hajj Fund), Amanah Saham Bumiputera (Bumiputera Unit Trust Fund), and others.

3. Withdrawals from EPF Account 2 are allowed.

In addition to the mandatory withdrawal upon reaching the age of 55, you can also make partial withdrawals from your EPF savings through Account 2, subject to specific conditions.

Withdrawals from EPF Account 2 for Personal Purposes.

To facilitate members, EPF also allows for full or partial withdrawals from their savings to meet specific needs in line with the existing EPF policies. Here are some withdrawals that you can make from Account 2 for personal purposes:

i. Partial Withdrawals

Hajj Pilgrimage: Maximum withdrawal of up to RM3,000 for Hajj expenses.
Health and Medical Expenses.
Age 50: Partial or full withdrawal of Account 2 savings upon reaching the age of 50.
Withdrawal for Housing: Building or purchasing your first or second home.
Financing Education: Withdrawal for personal education or for your children’s education.
Monthly Housing Loan Installments: Withdrawal to cover monthly housing loan repayments.
Withdrawal exceeding RM1 million in savings.
Withdrawal to reduce or settle the remaining housing loan balance.

ii. Full Withdrawal

Here is a list of full withdrawals for your reference:

Age 55 – You can withdraw all or a portion of the savings from this account at any time.
Age 60 – This withdrawal is a continuation of the withdrawal at age 55. You can choose to make a lump-sum withdrawal or partial withdrawals at any time.
Permanent physical or mental disability.
Leaving the country – applicable to citizens, permanent residents (PR), or non-citizens.
Members who have retired from the public sector.
In the event of the member’s death.

4. Other Advantages Besides EPF Dividends

In addition to EPF dividends, members who save with EPF are entitled to certain advantages and benefits, including the following:

1. EPF Dividend

The minimum guaranteed rate set by the government is 2.5 percent. Although it may sound relatively low, the EPF dividend rates announced in recent years have been at a healthy level, ranging from around five to six percent.

i. How to Check EPF Dividend

For your information, the EPF dividend review for 2021 can only be done starting from 6th March 2022. For those who may not be aware, here are the steps to check the dividend online through i-Akaun:

Visit www.kwsp.gov.my.
Log in to your i-Akaun.
Enter your registered ID and Password.
Click on “View Details” in the Dividend menu section.
The details of the current year’s dividend will be displayed for your review.

In order to check the dividend through i-Akaun, you need to register for the service first. Here are the steps to register for EPF online for your reference:

ii. How to Register for EPF i-Akaun Online without Going to the Counter

Registering for EPF i-Akaun online without going to the counter is very easy. However, make sure you comply with the following registration requirements to facilitate your application process.

Registration Requirements:

To be eligible for registering for EPF i-Akaun, you need to meet the following four criteria:

You are an EPF contributor.
You have a valid EPF membership number.
You have an active phone number – to facilitate the delivery of temporary passwords or TAC (Transaction Authorization Code) to your mobile phone.
Your employer has a valid EPF number.

Online i-Akaun Registration

After receiving the temporary password via SMS, you can follow the following steps:

Visit the EPF i-Akaun website at https://secure.kwsp.gov.my/member/member/login.
Enter your EPF Membership Number in the User ID field and click Next.
Enter the temporary password received via SMS and click Log In.
Read and accept the displayed terms and conditions by checking the box and clicking Next.
Create a new User ID – a combination of numbers and letters of your choice (e.g., Qoala25). Note: The User ID can only be changed once during the activation process.
Create a new password – a combination of numbers and letters of your choice (e.g., Qoala1n5uran5).
Select a Security Image and enter a Secret Phrase with a maximum length of 10 characters. Then, click Next.
The successful activation screen will be displayed.
Log in using your new User ID and password.

2. Disabilities, Death

If a member is found unable to work or passes away, the nominee or beneficiaries will receive a compassionate payment from EPF. This compassionate payment is not taken from the member’s funds but is provided by EPF to alleviate the burden on the family. The payment amount is RM5,000 for permanent disability and RM2,500 for death (subject to EPF’s terms and conditions).

3. Income Tax Exemption

In addition, EPF contributions for non-pensionable public servants or private sector employees are also eligible for tax relief. Members are eligible to claim a tax relief of up to RM4,000 for EPF contributions or other approved schemes, which include personal contributions and exclude employer contributions.

May this sharing about EPF dividends and important information regarding EPF retirement savings help you in planning your savings for your future retirement needs.

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