The following are some frequently asked questions that we often encounter:
1. "How do variations in the EPF (KWSP) contribution rates impact the calculation of employee portions, as seen in discrepancies from the KWSP 3rd schedule?"
2. "What factors can lead to differences between actual EPF contributions and the amounts outlined in the KWSP 3rd schedule for employee contributions?"
3. "In what scenarios might an employee notice a variation in their EPF contribution as compared to the figures stated in the KWSP 3rd schedule, and how should they address it?"
Below, you'll find responses to frequently asked questions that we often encounter:
By default, employees' monthly statutory contribution rate is 11% for employees below the age of 60.
To ensure that your employee's EPF contribution amount is calculated accurately as per the KWSP's Third Schedule, you will need to choose "Statutory Default" option under EPF (Employee) setting field:
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However if you choose "11%" instead, the system will perform direct calculations with the raw total wage for Employee's EPF calculations who have the custom rates selected for them in the system.
This means that the final EPF contribution amount will differ from the actual EPF value found in KWSP's Third Schedule.
If you wish to avoid any such discrepancy, "Statutory Default" is the correct option to select before you proceed to process payroll.
How are the EPF calculations done for non-standard rates?
Should any other option besides the "Statutory Default" option be selected for the 'EPF (Employee) setting' and 'EPF (Employer) setting' fields in an employee's profile, this is considered non-standard rates:
Therefore, the KWSP's Third Schedule ranged values for EPF calculations will not apply for employees in payroll.
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We will use the raw wage values to do rounding calculations if manual EPF percentage rates were chosen in the employee's profile.
For example:
If we have 2 employees with the same gross salary of RM 4,010:
Employee A is using “Statutory Default” rate, whilst
Employee B is using a custom (non-standard) rate
Their EPF amounts calculated will be different.
Let's look at these employee's EPF (Employee) calculations as an example:
1) For Employee A, who is using “Statutory Default” EPF rates, the calculations will be as such:
RM4,010 is in the range of RM4,000 to RM4,020 in the Third Schedule
We will follow the Third Schedule and take the upper limit of the range, which is RM4,020, and apply the default statutory rate of 11.00%
EPF (Employee): RM4,020.00 x 11% = RM443.00 (442.2 rounded up)
2) For Employee B, who using a custom rate of 10.00%, the calculations will be as such:
Since this is a custom rate, we will use the raw values from the custom rates indicated to calculate the final values
We'll use a direct multiplication of the wages subjected to EPF calculations (RM4,010) with the custom rate (10.00% chosen), and then round up
EPF (Employee): RM4,010.00 x 10% = RM401.00 (no rounding as this is already an exact value)
The above examples accurately explains how the EPF calculations are done for statutory default rates versus custom EPF rates chosen. 😄