Ex-EPF CEO proposes employers pay higher EPF contributions for low-wage workers while reducing contributions for high-income staff

KUALA LUMPUR, Sept 30 — Former EPF CEO Tan Sri Shahril Ridza Ridzuan has proposed a solution to help lower-wage workers save more for retirement by increasing the contributions from their employers, while reducing the contributions for high-income staff. Currently in Malaysia, employees under the age of 60 are required to contribute 11% of their salary into their EPF retirement savings, while employers must contribute 13% if the employee's salary is below RM5,000 or 12% if it is above RM5,000.

Shahril, who is also Axiata Group Berhad’s chairman, believes that the issue lies in the slow growth of wages in Malaysia over the past 50 to 60 years. He suggested that employers should contribute a higher percentage, such as 15% or 16%, for workers earning below RM5,000, and a lower percentage, around 4%, for workers earning above RM10,000.

This progressive approach would enable lower-income workers to build their retirement savings more rapidly. Shahril emphasized that the focus should be on addressing wealth inequality and finding ways to share wealth between capital owners and workers instead of differentiating investment yields for EPF accounts based on the balance size.