RETIREMENT & PENSION PLANNING

What is Retirement?
Retirement is the beginning of a new stage of life after

working.

Planning your retirement is a very personal process, not simply following a one-size-fits-all plan.

Retirement plan should be based on your vision of the life

you hope to lead, and must also take your financial picture into account.

The best time to start planning your retirement is while

you're still working.

Some questions to ask yourself:

Do I want to retire? How do I want to spend my time in retirement? How will I handle not having to go to work? How much income will I need in retirement? Am I psychologically ready to retire? What impact will my retirement have on my family? What if I don't retire and instead keep on working like I am now?

PLANNING FOR YOUR RETIREMENT

EPF / KUMPULAN WANG SIMPANAN PEKERJA www.kwsp.gov.my

KUMPULAN WANG PERSARAAN www.kwap.gov.my

What is EPF/KWSP ?

it is an agency that handles our savings for our retirement The savings are deducted from our monthly income and also contributed by our employer 11% of our income is contributed to our EPF another 12% is contributed by our employer this saving plan is a benefit when we are no longer capable to work we retire if we do not contribute, we will lose the retirement benefit that is provided by our employer

MISSION & VISION

Vision To be a world-class social security organisation providing the best retirement savings for Malaysians. Mission To provide the best Retirement Savings Scheme.

Who can contribute in EPF?

All employees in Malaysia who have reached the age of 16 and employed under a contract of service whether express or implied, and whether oral or in writing must be registered as a member of the Employees Provident Fund. Those who are exempted from making the compulsory contribution are:
employees or workers holding Employment Pass or expatriates holding Visit Pass Foreign domestic maids Self-employed persons Out-workers who do cleaning and alteration repair works Persons detained in custody, in prison, Henry Gurney School and mental hospital

Where a member continues employment after withdrawing the contributions upon retirement, such member may opt to continue contributing to the EPF by submitting the KWSP 20/20A Form.

Benefits of EPF

Gain more than just an assured savings that will be available to you upon your retirement. Other benefits of EPF : Dividen Tax Incentive Retirement Benefits Death and Incapacitation Benefits Saving Investment

Types of Account

Contributions received will be credited into the two accounts according to the following percentages:
Account I - 70% of monthly contribution
Savings in this account is meant to be used for your retirement, and it cannot be fully withdrawn before you reach the age of 55, become incapacitated, leave the country or deceased (payment will be made out to your nominee / heir).

Account II - 30% of monthly contribution

Savings in this Account is meant to help you to make early preparations for a comfortable retirement. Withdrawals are allowed for the purposes of: Attaining the age of 50 years; Owning a house - the downpayment for your first house; Settling the balance of your housing loan - first house; Financing education for you and that of your children's; Medical expenses for you and that of your children's

Types of Withdrawals
Pre-retirement withdrawal
allows you to withdraw a certain amount from your savings before you reach the retirement age. This is to help you make the necessary preparations for your retirement.

Retirement withdrawal
allows you to withdraw all of your savings upon reaching your retirement age.

Pre-retirement
withdrawal
Incapacitation Withdrawal Leaving Country Withdrawal Death Withdrawal Age 50 Years Withdrawal Education Withdrawal Health Withdrawal Members savings Investment Withdrawal Withdrawal of savings of more than RM1 Million Pensionable Employees Withdrawal Housing Retirement Optional Retirement

Retirement withdrawal

Age 55 Years Withdrawal

This withdrawal enables you to withdraw all your EPF savings upon attaining 55 years of age to provide financial support during your retirement period. You can withdraw your savings either in a lump sum or partially.

Application Eligibility
You are eligible to apply if you: Are an EPF member who has reached the age 55 at the time the EPF receives your application; Still have savings balance with the EPF; Are a Malaysian Citizen; OR Are a Malaysian Citizen who has made Leaving The Country Withdrawal before 1 August 1995 and has opted to re-contribute to the EPF; OR Are a Non-Malaysian Citizen who: Has become an EPF member before 1 August 1998; OR Has obtained a Permanent Resident status (PR).

What is KWAP ?

KWAP is Kumpulan Wang Persaraan (diperbadankan) or the Retirement Fund (Incorporated) replacing the repealed Pensions Trust Fund.

Objectives of KWAP
The objective of KWAP is to manage the Fund towards achieving optimum returns on its investments. The Fund shall be applied towards assisting the Federal Government in financing its pension liability.

Functions of KWAP

Management of contributions from the Federal Government, Statutory Bodies, Local Authorities and other Agencies; and Administration, management and investment of the Fund in equity, fixed income securities, money market instruments and other forms of investments as permitted under the Retirement Fund Act 2007 (Act 662).

About KWAP

Main responsibilities is to manage pension contributions which are remitted to KWAP by contributing employers in accordance to the Statutory and Local Authorities Pensions Acts 1980 (Act 239) and Service Circular No 12/2008 on the Policy and Procedure of Appointment of Secondment, Temporary and Permanent Transfer.

As stipulated by the Act, contributing employers comprising of statutory bodies, local authorities and agencies shall remit to KWAP the pension contributions for employees who are granted pensionable status by the Public Service Department

Mission & Vision

Mission Maximising returns through benchmarking, dynamic investment framework and sound risk management. Vision A high performing fund assuring sustainable pension benefits.

Malaysia Provident/ Pension Fund Value Chain

The diagram below illustrates Malaysia's provident/ pension fund value chain with KWAP's role in the context of pensionable civil service.

Registration
Employers : An organization, statutory body and local authority is under a duty to register with KWAP as an employer under the following circumstances : A statutory bodies or local authority has been formed or established. Employees of the organization, statutory body and local authority are conferred pensionable status by Public Service Department.

The following documents must be submitted for registration purposes: Application letter by the employer. A copy of the Act gazetting the establishment of the organization as statutory body or local authority

Members Registration

It is the duty of the employer to register its pensionable employees with KWAP upon the grant of the pensionable status by Public Service Department. Employers are required to submit the following documents for the registration of its employees:

An application letter by the employer Member's Registration Form (CP1) A copy of approval letter by the Public Service Department on the grant of pensionable status

Pension Contributions

Rate of Contribution The rate of contribution is 17.5% of the pensionable employee's basic salaries.

Payment Date Payment of pension contribution shall be remitted to KWAP no later than end of the following month

Late Payment Late payment of pension contributions shall be subject to a penalty at a rate of 0.5% of the unpaid amount

Penalties Employers who fail to remit pension contributions within the prescribed time shall be charged penalties under Section 8(4) of the Statutory and Local Authorities Pensions Act 1980 (Act 239). Penalties are charged at the rate 0.5% in respect of each month default in payment for the amount remains unpaid.

Who can contribute?

KWSP
Private and non-

KWAP
All statutory

pensionable Public Sector employees

bodies, local authorities and agencies with employees of pensionable status shall contribute to KWAP

Difference between KWSP & KWAP

KWSP manages contributions from private sector employees and government employees who opted to contribute to the EPF.
KWSP will send the annual Statement of Account to members by post. Normally, the statement will be sent to members to their correspondence address that has been updated in the EPF record.

Difference between KWSP & KWAP

KWAP only manages contributions from permanent government staff with pensionable status and who are in service with Regulatory Body and Local Authorities .
KWAP does not send out annual statements to its contributors