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.
Employers are currently required to contribute 13% for those earning RM5,000 and below, and 12% for those earning above RM5,000. Employees contribute 11%.
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.