15% Government Incentive for your EPF?!

If you are self-employed, or gig worker, or working in Singapore like me (or any other country), well EPF is really sometimes out of topic since we don’t have to contribute and our boss (or you are the boss) would not contribute for us also. So what caught my attention that I want to write an article about it here?

Early this year, I went to EPF branch to check my account which I registered years ago when I worked my first formal job.

The amount of money in that account is not significant, but the information I received from the officer is!

Introducing retirement incentive i-Saraan!

Under this incentive, we will receive a 15% government contribution (capped at RM250/year) on top of your own contributions. The incentive will be given from year 2018 to year 2022 (so basically three more years at the time of writing)

Other than the incentive, there are also other attractive benefits:

  • Contribute according to your own time and within your own financial ability and still be able to make withdrawals
  • Earn annual EPF dividend on your retirement savings
    (EPF have been distributing an average of 6% dividend consistently for the past two decades!)
  • Death Benefit: RM2,500 (subject to EPF terms and conditions)
  • Income tax relief

So who can apply for this lobang? Here’s the eligibility:

Okay next, now how to apply for this lobang?

Since it is additional 15% incentive and capped at RM250/year, by calculation, in order to gain full benefit of this incentive, a minimum contribution of RM1667 is required. Personally, I just contributed RM1700.

  1. First, you need to register as an EPF member at your nearest branch or smart kiosk. All you need is bring along your Identification Card.
  2. Then, apply for i-Saraan.
  3. Obtain Form KWSP 16G(1M) via any EPF branch/online.
  4. Submit form at branch over the counter or through mail.
  5. Make your contribution via EPF counter/mail, appointed bank agent counter (RHB, MBB, PBB, BSN) or Internet Banking (Maybank and Public Bank)

And, that’s it!

The officer told me that the incentive will be received only by next year. Well, judging from the previous lobang I got from government for Private Retirement Scheme (PRS): free RM1,000 PRS Youth Incentive, which only came after more than a year, I am not surprised. Got to be patient when dealing with government. You know what I mean.

My 2 cents

Putting money into EPF while most are taking it out during this pandemic can be questionable. The main concern that we all have is, we can only use this money at the age of 55 (30 years later for me), and who knows what can happen during this long period.

In my opinion, if you have RM1667 to spare (it is SGD556 for me) after your living expenses and other investment, why not take advantage of this government incentive? It is basically free money.

What’s more alarming is that if you are self-employed or gig-worker or like me working in Singapore, and this is your first or only investment. Then we need to start worrying.

EPF is the backup plan for most Malaysians, but do you know that the average amount we have in EPF account by the time of retirement is only RM120,000 and 70% of us used it up within 10 years? Check out the gruesome statistic here.

Remember that although we earn 3 times more (if you work in Singapore like me), we do not even have this backup plan. We are on our own.

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