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FMM against proposal to increase employers’ EPF contribution

FMM In The News: FREE MALAYSIA TODAY, PETALING JAYA, May 2, 2023 - The Federation of Malaysian Manufacturers (FMM) says it is not in favour of a proposal to increase employers’ EPF contribution as a means to boosting employees’ retirement savings.

“The government’s focus should be on keeping the cost and standard of living manageable, as well as ensuring a positive economic growth trajectory which would provide a conducive environment for businesses to increase their profits and improve their cash flow,” said FMM president Soh Thian Lai in a statement.

He said this would then allow businesses to provide better wages and benefits for their employees.

On Sunday, Prime Minister Anwar Ibrahim said the government will discuss a proposal to increase employers’ EPF contribution as a response to demands from various unions for such an increase to boost employees’ retirement funds.

Soh said that while the statutory contribution rates for employers were fixed, employers had the discretion to contribute a higher percentage based on their respective human resource and talent retention strategies.

The contributions by employers are tax-deductible up to 19% of the employees’ pay.

“Hence, mandating a higher contribution rate would be detrimental to employers, especially for the SMEs that make up 97% of businesses,” he said.

He added that the current conditions of deductions and contributions towards the retirement savings for EPF members were also “very sound” in meeting future needs.

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