UPM BBA 2015 Subject : Compensation Management

1. EMPLOYEES PROVIDENT FUND (EPF)
Employer Responsibilities &
Employees Benefits

2. Employee Provident Fund (EPF)
• EPF is a social security institution formed according to
the Laws of Malaysia, Employees Provident Fund Act
1991 (Act 452)
• Provides retirement benefits for members through
management of their savings in an efficient and reliable
manner
14.19 million
members
6.6 million
Active members
530,166
Active employers

3. Investment Allocation
• Invested in a number of approved financial instruments to
generate income such as Malaysian Government Securities,
Money Market Instruments, Loans & Bonds, Equity and
Property
Dividends
• Guaranteed 2.5% annually
• 8.50 % in 1983-1987
• 6.75 % in 2014
Employee Provident Fund (EPF)

4. Employee Provident Fund (EPF)
Employer
Employee
Wages
A person(s) with whom an
employee has a contract of
service or apprenticeship.
A person who is
employed under a
contract of service or
apprenticeship.
All remuneration in
money due to an
employee under his
contract of service or
apprenticeship.

5. Employer Responsibility
• Employer Registration (Section 41 (1) of the EPF Act 1991)
– Items provided to employers after the registration
• Enrolling Employees as EPF Members
– Member Registration (Form EPF 3)
– Through Member Registration Form Monthly Contribution (Form A)
– Registration EPF Members Through MyKad
– Employer’s i-Account
• Bookkeeping / Pay register
• Providing wage statements
• Pay EPF Contributions
Employee Provident Fund (EPF)

6. Contribution
• The employer must pay his employee's contributions based
on the rate stipulated in the Third Schedule of the EPF Act
1991.
• The employer must contribute within the stipulated period,
which is on or before the 15th of the month following the
wage month.
Employee Provident Fund (EPF)
11%
Employee
13%
Employer
12%
Employer
Salary < 5,000
Salary > 5,000
*5.5% for 60yrs and
above
*Rm5 for non-Malaysia

7. Employee Benefits
• Your EPF savings are a mandatory savings which have been
enforced to help you during your retirement. This means that
you may not withdraw your EPF savings until you retire.
• There are 2 types of accounts :-
– Account 1 (70%)
– Account 2 (30%)
Account 1
• The savings can only be withdrawn when a member reaches
the age of 55.
• Part of the savings in Account 1 can be used to invest in unit
trusts through EPF-approved Fund Management Institutions.
Employee Provident Fund (EPF)

8. Account 2
• The savings in Account 2 can be withdrawn for the following
purposes:-
Employee Provident Fund (EPF)
Housing Education Medical
Age 50
Saving more
than 1m
Hajj
Leaving
country

14. INSURANCE BENEFITS
Coverage and Policy

15. Group Term Insurance
• Covers several persons under one policy, called a master
policy.
• The employer is the policy owner and the employees are the
insureds.
• Yearly renewable and the premiums are intended to cover
expected benefits and expenses for only the current policy
year.
• Benefits available from a group health insurance :
Insurance Benefits
Group Life
Insurance
Group Personal
Accident
Group Medical
Group Managed
/ Preferred Care

20. Foreign Workers Compensation Scheme
• It mandatory for each employer to insure all the foreign
workers employed by him in respect of any liability he may
incur under the Workmen's Compensation Act 1952.
• For injuries sustained due to accident which arises out of or in
the course of employment or if the death results from the
accident.
Foreign Workers Insurance Guarantee
• All employers have to either place cash or obtain an IG/BG in
favour of the Immigration Department for each worker they
employ.
• Employers normally obtain the IG/BG from insurance
companies rather than placing cash or using their own Bank
facilities.
Insurance Benefits

21. Foreign Workers Hospitalization & Surgical
• Mandatory with effect from 01 January 2011.
• Cashless admission into a Non-Corporatized Malaysian
Government Hospital. The hospitalization and surgical
benefits is as charged in accordance against accidental injuries
and illnesses.
• The cashless admission will be administered by a Third party
Claims Administrator (TPCA) approved by the Ministry of
Health.
• The annual premium inclusive of TPCA fees is RM120.00 per
worker FWCS was created to protect the interest and welfare
of all foreign workers in Malaysia.
Insurance Benefits

22. Thank You
Prepared by : Hafizullah Mohd Amin (EX02906)
Lecturer : Dr. Samsudin Yaacob