Employees’ Provident Fund (EPF)

The EPF is managed by the Employees’ Provident Fund Organisation, a government body. Under the scheme, the employee contributes 12% of their basic salary and dearness allowance, and the employer contributes a matching 12%. Part of the employer’s contribution goes to the Employees’ Pension Scheme, which provides a pension, and the rest goes to the provident fund.

The accumulated balance earns interest at a rate declared by the government each year. Employees can make additional voluntary contributions.

For example, an employee with a basic salary of 30,000 a month would contribute 3,600 a month, with the employer contributing a further 3,600, divided between the provident fund and the pension scheme.

Each member has a Universal Account Number, which stays the same when changing jobs, making it easier to carry the balance forward. Withdrawals are generally allowed at retirement, and partial withdrawals are permitted for purposes such as housing, education, marriage or medical needs. Tax treatment depends on the length of service and contribution levels, and rules are updated from time to time. Several other countries, such as Malaysia and Singapore, have similar provident fund systems.