Social Security in Malaysia

Disability and pension

Social Security in Malaysia

Social Security is provided in Malaysia by SOCSO, the Social Security Organization. At the same time the Employment Provident Fund (EPF) supplys benefits which are predominantly for retirement purposes, but also provides withdrawal schemes for specific purposes.

The contribution to both schemes the SOCSO and the EPF are compulsory, this means every employee and employer is obliged to pay a certain amount of the employee's monthly wage into these funds.

Other benefits, such as maternity and sickness, are covered by the labour law under the Malaysian Employment Act of 1955.

Disability benefits – SOCSO

The SOCSO, whose Malaysian term is PERKESO (Pertubuhan Keselamatan Sosial), offers two insurance schemes: The Employment Injury Insurance scheme and the Invalidity Insurance scheme. The rate of the employer's contribution is 1,75% of the employee's monthly wage for both schemes (1,25% for Employment Injury and 0,5% for Invalidity) while the worker contributes 0,5% to Invalidity Insurance scheme only.

The SOCSO covers industrial accidents, occupational diseases, accidents, invalidity or death. Further benefits, including further specific benefits.

Until a couple of years ago foreign workers had not been covered by the Social Security Organisation. Now, they are protected under the Worker's Compensation Act 1952 while the SOCSO still only covers Malaysian workers and permanent residents. The employer contributes RM 86 for each foreign worker per year to this scheme which covers employment as well as non-employment injuries of the foreign worker.

Retirement benefits – EPF

The Employment Provident Fund, known in the Malay term as KWSP (Kumpulan Wang Simpanan Pekerja), was initially introduced as a savings scheme only. It still covers the pension funds, but now employees are allowed to withdraw their savings for specific purposes like house ownership and medical purposes.

The employer pays a contribution rate of 12% of the workers monthly rate, while the employee contributes 11%.

Foreigners holding an Employment or Visit Pass, and whose monthy salary exceeds RM 2500, are exempted from the compulsory contributions. All other contribute with 11% of their monthly wage while the employer pays RM 5 per person per month.

Maternity benefits

Pregnant women are eligible to maternity benefits from any day within 30 days before the date for the childbirth. They are entitled to 60 paid days during the maternity leave. The female employee is entitled to maternetiy benefits under the condition that she has been employed for at least 90 days within the 4 month period preceding the childbirth and she must not have more than 5 children.


The Malaysian Social Security systems suffers some shortcomings. All schemes named above only cover contruibutions to the age of 55. After that, the employee has to use his pension or any other funds. In addition, there is no such thing as unemployment insurance. The only payments the unemployed receives are the payments of termination as stated in the Labour Law. Lack of child and family social schemes are just as much an issue as the exclusion of self-employers from compulsory insurance.

Further reading

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