Malaysia (MY)

Multicultural, English-friendly Malaysia offers affordable living, world-class street food, tropical lifestyle, and a well-developed expat infrastructure in Kuala Lumpur and Penang.

Capital: Kuala Lumpur

Region: Asia

Language: Malay

Currency: MYR (RM)

Cost of living: Very affordable (index 40)

Emergency: 999

Social Security in Malaysia

Benefits, contributions, and how the system works for expats.

Malaysia's social security system is built on three mandatory employee contribution schemes — EPF (Employees Provident Fund / KWSP), SOCSO (Social Security Organisation / PERKESO), and EIS (Employment Insurance System) — plus the JKM (Department of Social Welfare) for non-contributory welfare assistance. Unlike European social insurance systems, Malaysia has NO universal state pension, NO universal unemployment insurance benefit (EIS provides limited retrenchment support), and NO universal healthcare (see healthcare info). EPF is the primary retirement vehicle and functions as a mandatory defined-contribution pension — the balance is the employee's own savings with employer top-up, not a pooled pension. SOCSO covers employment injury and invalidity; EIS covers involuntary job loss retrenchment. All three are mandatory for employed persons on Employment Pass.

Income Tax Number / EPF Membership Number / SOCSO Number

Nombor Cukai Pendapatan / Nombor Ahli KWSP / Nombor SOCSO

Three separate reference numbers apply in Malaysia. (1) Income Tax Number: register at any LHDN (Inland Revenue Board) office or online at hasil.gov.my — required for tax filing; employer may register on your behalf. (2) EPF Membership Number: automatically assigned when your employer registers you for EPF — you receive it when you activate i-Akaun at kwsp.gov.my or at an EPF branch (bring EP + passport). (3) SOCSO Number: automatically registered by your employer — check your SOCSO details via assist.perkeso.gov.my with your IC/passport number. All three registrations are typically handled by your employer on joining — verify all three are active within your first month of employment.

Used for

EPF number: monthly contribution tracking, balance checks, withdrawal applications (on departure/retirement)
SOCSO number: employment injury claims, invalidity pension eligibility, contribution history
EIS number: retrenchment benefit claims if involuntarily terminated
Income Tax Number: annual tax filing, tax clearance (Form CP22A on departure), applying for tax refunds
All three: required for your HR department to make correct statutory deductions and contributions

Benefits & Support Payments

EPF (Employees Provident Fund)

Kumpulan Wang Simpanan Pekerja (KWSP)

Employer: 12–13% of gross salary. Employee: 11% of gross salary. Dividend: historically 5.35–6.1% p.a. (2026: ~5.5% for conventional, ~5.0% for Shariah)

Malaysia's mandatory defined-contribution retirement savings fund. Employee contributes 11% of gross salary; employer contributes 12–13% (12% for salaries above RM5,000; 13% for salaries RM5,000 and below). Total: 23–24% of salary monthly into EPF. EPF invests contributions across equities, bonds, and real estate — historically returns 5–6% annual dividend. EPF Account 1 (70% of contributions): locked until age 55 (some medical/housing withdrawals permitted). Account 2 (30% of contributions): more flexible — for housing, education, insurance, medical. New in 2024: Account 3 ("Akaun Fleksibel") — additional flexible withdrawal account from 10% of monthly employee contribution.

Eligibility

All employees earning wages in Malaysia — including foreigners on Employment Pass, except for foreign workers (immigrants) who may opt-out and instead receive employer contribution only under a different rate structure. Self-employed: optional EPF via i-Saraan scheme (RM250 minimum contribution; no employer match; government incentive RM300–500 matching for eligible participants).

How to Apply

Automatic — employer registers you within 7 days of employment commencement. Activate i-Akaun online at kwsp.gov.my or at any EPF branch (EP + passport required for verification). Check your balance and transaction history via i-Akaun app.

On departure from Malaysia: full EPF withdrawal is available after EP cancellation. File Form KWSP9(M) at any EPF branch. Processing takes 3–10 business days. Withholding tax of 0% (resident) or up to 15% (non-resident if withdrawn within 5 years of final contribution) may apply — check with EPF. EPF is NOT transferable to a foreign pension — it must be withdrawn. Average EPF balance at retirement age in Malaysia is approximately RM240,000 — considered insufficient for a long retirement.

SOCSO Employment Injury Scheme (EIS Pekerjaan)

Skim Pencen Hilang Upaya (PERKESO)

Employee rate: 0.5% of salary (capped at RM86.65/month). Employer rate: 1.75% of salary (capped at RM302.40/month). Rates are based on insured wage tables up to RM5,000/month. For salaries above RM5,000: contributions continue but on capped wage basis.

Covers employees against work-related accidents and occupational diseases. Benefits: Medical Benefit (full medical treatment costs at SOCSO panel hospitals), Temporary Disablement Benefit (80% of insured wages during recovery), Permanent Disablement Benefit (lump sum or annuity based on loss of earnings capacity), Dependent's Benefit (to family on death from work injury), and Survivor's Pension.

Eligibility

All employed persons earning wages in Malaysia, including EP holders. Excluding: domestic servants, self-employed, government employees (separate scheme). Registration is automatic by employer.

How to Apply

File claim via assist.perkeso.gov.my or any SOCSO branch. For work injury: notify employer immediately; employer submits Form 34 (Accident Report) to SOCSO within 48 hours. For occupational disease: medical certification from a registered practitioner required.

SOCSO Invalidity Scheme (separate component): provides monthly pension for employees who become permanently disabled (non-work-related invalidity pension) after qualifying contributions. This invalidity pension is important for expats who may not have coverage elsewhere — confirm your SOCSO contributions are being correctly paid by your employer via assist.perkeso.gov.my.

EIS (Employment Insurance System)

Sistem Insurans Pekerjaan (SIP)

Employee rate: 0.2% of salary. Employer rate: 0.2% of salary. Job Search Allowance: 80% of last insured wage for first month, then reducing (60%, 50%, 45%, 40%, 40%) over 6 months. Maximum insured wage: RM5,000/month.

Provides limited income replacement and job search assistance for employees who lose their jobs involuntarily (retrenchment, non-renewal of contract, constructive dismissal). NOT available for resignation, retirement, or end of fixed-term contract at expiry. Benefits: Job Search Allowance (40–60% of last insured wage for 3–6 months based on contribution history), Reduced Wage Supplement, Career Counselling, Training Allowance.

Eligibility

Malaysian citizens and permanent residents employed in the private sector. Foreign nationals on Employment Pass contribute to EIS but CANNOT claim EIS benefits — the contribution is mandatory but non-refundable for EP holders. EIS benefits are only available to Malaysian citizens and PR holders.

How to Apply

Claim must be filed within 60 days of job loss at assist.perkeso.gov.my. For EP holders: acknowledge that contribution is mandatory but no benefit is receivable — this is a known inequality in the system as of 2026.

EP holders pay EIS contributions (0.2% each employer and employee) but cannot claim benefits — effectively a subsidy to the Malaysian EIS system. Some EP holders are unaware of this. The Government has discussed extending EIS to some categories of legal foreign workers but no change has been enacted as of 2026.

JKM Social Welfare Assistance (Bantuan Kebajikan)

Jabatan Kebajikan Masyarakat (JKM)

Varies by programme: Bantuan Am RM300/month basic; elderly assistance RM350/month

Non-contributory means-tested welfare assistance for low-income Malaysian citizens and permanent residents — elderly, disabled, single mothers, and impoverished families. Programmes include Bantuan Am (general welfare), elderly care, disability assistance, and child welfare placement.

Eligibility

Malaysian citizens and permanent residents who meet income and means-testing criteria. Foreign nationals on Employment Pass are NOT eligible for JKM welfare assistance.

How to Apply

Apply at nearest JKM branch or online at jkm.gov.my. Income verification and home visit required.

EP holders in financial hardship should seek assistance from their embassy, company HR department, or community organisations (e.g., Yayasan Chow Kit, Caritas Malaysia for Catholics) rather than JKM welfare programmes, which are reserved for Malaysian citizens and PR holders.

Contribution Overview

Total mandatory contribution burden per employee in Malaysia 2026: Employee deductions from salary: EPF 11% + SOCSO 0.5% + EIS 0.2% = 11.7% of gross salary. Employer contributions on top of salary: EPF 12–13% + SOCSO 1.75% + EIS 0.2% = approx. 14–15% of gross salary. For a RM8,000/month salary employee: Employee takes home RM8,000 minus RM936 (EPF) minus RM40 (SOCSO) minus RM16 (EIS) = approximately RM7,008 before income tax. HRD Corp (Human Resources Development Corporation): 1% employer levy for companies with 10+ employees and payroll above RM500,000 — used for training fund, not a social benefit.

International Social Security Agreements

Malaysia has Social Security totalization agreements with: Japan (2010), South Korea (2013), United States, Netherlands, Hungary, Canada, and several others. These agreements prevent double contribution — employees from countries with totalization agreements may be exempt from Malaysian SOCSO/EIS contributions if they continue to contribute to their home country social security and obtain a Certificate of Coverage. EPF does not have international totalization — EPF contributions are always required for employed persons in Malaysia regardless of home country. Verify your home country agreement at perkeso.gov.my or with your employer's HR or payroll team.

Malaysia's social security system is designed primarily for Malaysian citizens — the combination of EPF (own savings, fully retrievable on departure), SOCSO (accident and invalidity protection), and EIS (retrenchment support, Malaysian citizens/PR only) means expats receive most protection through EPF. On departure, full EPF withdrawal is the most financially significant action for departing expats. The most important thing for newly arrived EP holders: verify within the first month that your employer has correctly registered you for all three schemes (EPF, SOCSO, EIS) — check via i-Akaun (EPF), assist.perkeso.gov.my (SOCSO/EIS), and request payslip showing all deductions.

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