Define The Purpose And Scope Of The Employees Provident Fund Act

Topics: Investment, Employees Provident Fund, Rate of return Pages: 1 (476 words) Published: March 7, 2015
Define the purpose and scope of the Employees Provident Fund Act. To what extend would you agree that the Employees Provident Fund achieving its objectives? In Laws of Malaysia, Employees Provident Fund Act 1991 (Act 452) formed the Employees Provident Fund (EPF), which is a social security institution of Malaysia. EPF was actually established in 1951 under Employees Provident Fund Ordinance 1951 by National Director of Posts EPF. After a few decade, the law had become EPF Act 1951 in 1982 and then EPF Act 1999 in 1999. EPF is a compulsory savings scheme for provides retirement benefit for their member in Malaysia. Their members are made up from Malaysia citizens and also voluntary for non-Malaysia. In EPF Act 1991, employees and their employers is required to make contribution towards the saving scheme based on their monthly salary. According to the Act, when the wage of employees is RM5000 and below, employee should contribute is 11% of their monthly salary and their employer should contributes 13% into the EPF. For employees who wage is more than RM5000, then the employee should contribute 11% remains and the employer's contribution become 12% (Alexis 2011). The purpose of EPF is to help members meet primary needs, provide a security measure for their members in old age and retirement or when they are no longer able to work. Besides withdrawals this saving scheme when retirement, it also can be withdraw partially by member when there are having special need like housing loan, education and health care issue. The monthly contributions by members are invested through approved financial instruments to increase the fund to get an optimum return. These financial instruments include Malaysian Government Securities, Loans & Bonds, Money Market, Equity and Property. The investment return are guarantees at a minimum of 2.5 Per Cent Dividend annually. In December 31, 2014 financial year, EPF had announced the dividend rate for this financial year is 6.35%. Which is...
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