Malaysia Pension Guide

EPF Defined Contribution System — Account 1 and Account 2

• Account 1 — 70% (for retirement): The EPF contribution is allocated 70% to Account 1 (the "Akaun 1" — the "retirement account"). The savings in Account 1 cannot be withdrawn until the member reaches the age of 55 (or the age of 60 for the Option 2 members). The Account 1 savings are invested by the EPF in the diversified portfolio — the fixed income, the equities, the real estate, and the money market instruments. The EPF declares the annual dividend rate (the "dividend" — the "annual return") — historically 5% to 6.5% per year.
• Account 2 — 30% (for housing, health, and education): The EPF contribution is allocated 30% to Account 2 (the "Akaun 2" — the "flexible account"). The savings in Account 2 may be withdrawn before retirement for the approved purposes: (a) the housing — the purchase of the first home, the reduction of the housing loan, or the construction of the house; (b) the health — the medical treatment for the critical illness (the member or the immediate family); (c) the education — the higher education expenses for the member or the children; (d) the age 50 — the one-time withdrawal of up to 30% of the total savings (the "age 50 withdrawal").
• Full withdrawal at age 55 or 60: Upon reaching the age of 55, the member may withdraw the entire EPF savings (Account 1 and Account 2) in the lump sum or in the partial withdrawals. The member who continues working may choose the "Option 1" (the full withdrawal at age 55) or the "Option 2" (the partial withdrawal at age 55 and the full withdrawal at age 60). The Option 2 members may withdraw 30% of the savings at age 55 and the remaining 70% at age 60.

Voluntary EPF Contributions (i-Saraan for Self-Employed)

• i-Saraan scheme: The self-employed individuals, the gig economy workers, and the informal sector workers may make the voluntary EPF contributions under the "i-Saraan" (the "Skim i-Saraan" — the "voluntary contribution scheme"). The scheme allows the contributions based on the declared income (the "pendapatan diisytihar" — the "declared income"). The minimum monthly contribution is MYR 5, and the maximum is MYR 60,000 per year.
• Tax deduction — up to MYR 60,000: The voluntary EPF contributions by the self-employed individuals are tax-deductible up to MYR 60,000 per year under the "relief for the voluntary EPF contribution" (the "life insurance and EPF relief combined" — the total relief for the life insurance and the EPF is capped at MYR 7,000 per year for the employees; the self-employed have the separate limit of MYR 60,000).
• Government matching incentive: The Government provides the matching contribution of up to MYR 300 per year for the i-Saraan contributors (the "Caruman Padanan Kerajaan" — the "Government matching contribution"). The matching is credited to the contributor's EPF account and is subject to the same withdrawal rules as the regular EPF savings.

Private Retirement Schemes (PRS)

• Voluntary retirement savings: The PRS is the voluntary retirement savings scheme managed by the approved fund managers under the Securities Commission. The PRS complements the EPF and offers the investment choices across the different risk profiles — the conservative, the moderate, and the growth funds. The PRS funds are segmented into the "sub-accounts" that correspond to the investor's age bracket (the "age-based asset allocation").
• Tax relief — up to MYR 3,000: The PRS contributions are eligible for the personal tax relief of up to MYR 3,000 per year (the "PRS relief" under the "individual income tax relief" — the separate category from the EPF relief). The relief is available for the Malaysian residents aged 18 and above. The relief is capped at MYR 3,000 per year for the combined PRS contributions across all fund managers.
• Withdrawal at age 55: The PRS savings may be withdrawn upon reaching the age of 55. The early withdrawal before age 55 is subject to the penalty — the withdrawal is taxed at the rate of 8% for the first year, 6% for the second year, 4% for the third year, 2% for the fourth year, and 0% for the fifth and subsequent years (the "exit penalty" — the "sliding scale penalty").

FAQs

What is the EPF dividend rate for 2026?

The EPF dividend rate for 2026 has not yet been announced at the time of writing. The historical dividend rates are: 2025 — 5.50% (conventional) and 5.40% (shariah); 2024 — 5.50% and 5.40%; 2023 — 5.35% and 5.25%; 2022 — 5.45% and 5.35%.

Can the foreign workers withdraw the EPF when leaving Malaysia?

Yes. The foreign workers (non-citizens) who have contributed to the EPF may withdraw the full EPF savings upon leaving Malaysia permanently. The withdrawal is processed through the EPF "Pengeluaran Penuh Sebagai Bukan Warganegara" (the "full withdrawal as non-citizen") and requires the proof of departure from Malaysia.

Is the EPF withdrawal taxable?

No. The EPF withdrawals at age 55 or 60 are tax-free. The EPF savings have already been accumulated from the tax-deductible contributions, and no further tax is applied on the withdrawal. However, the early withdrawals (before age 55) for the non-approved purposes may be subject to the tax penalty.