Group Questions Why Foreign Workers Must Contribute 2% To EPF But Can Withdraw 100% When Leaving Malaysia

A newly introduced mandatory policy requiring non-citizen workers in Malaysia to contribute to the Employees Provident Fund (EPF) has drawn public scrutiny.

Critics are pointing out glaring inconsistencies in the national retirement savings framework, particularly regarding relaxed withdrawal rules for foreign nationals.

PGIRM questions logic behind mandatory foreign contributions

According to Harian Metro, Pertubuhan Gagasan Inovasi Rakyat Malaysia (PGIRM) President Azmi Mohd Tahir has publicly questioned the rationale behind making a 2 percent monthly contribution mandatory for both foreign workers and their employers.

While the EPF has maintained that expanding coverage aims to provide social protection to all workers regardless of nationality, Azmi argues that allowing total withdrawals contradicts this primary objective.

Azmi also pointed to Section 70C of the EPF Act 1991, which allows non-citizen workers who are leaving the country, and have no intention of returning, to withdraw 100 percent of their accumulated savings under the “Leaving Country Withdrawal” scheme.

“However, the question is, if the main principle is social protection and retirement savings, why can foreign workers withdraw their entire savings when they leave Malaysia before reaching the age of 55?”
“PGIRM wants to ask policymakers, why does Malaysia choose to require non-citizen and non-PR foreign workers to contribute, but at the same time allow them to take out 100 percent of their savings when leaving the country?,” he said as reported by Harian Metro.

Comparisons with Singapore’s CPF model

Azmi also drew comparisons with neighboring Singapore’s Central Provident Fund (CPF) system. Unlike Malaysia’s framework, Singapore’s CPF is structurally built strictly to serve the retirement, housing, and healthcare needs of its citizens and permanent residents (PRs). For individuals who no longer hold citizen or PR status, the CPF enforces strict mechanisms to close accounts and transfer funds out.

PGIRM argued that if the government’s justification for the new mandate is labour market equality, granting full pre-retirement withdrawal access solely based on leaving the country creates an unfair double standard.

The plight of struggling local contributors

Azmi then said that struggling Malaysian contributors facing severe cost-of-living pressures are barred from accessing their own hard-earned savings simply because they have not turned 55. Meanwhile, foreign workers who pack up and leave the country are handed total freedom to clear out their accounts.

• Targeted Flexibility for Locals: PGIRM clarified that it is not demanding open, unrestricted withdrawals for Malaysians, but rather targeted, conditional, and strictly controlled access for those genuinely in extreme distress.
• Revisiting Retirement Fund Functions: Azmi emphasised that targeted relief can be extended without destabilizing the EPF’s core role as a retirement safety net.

“Don’t just talk about savings for the elderly, but also look at the lives of contributors before retirement. The government needs to explain this policy principle openly because the savings belong to the contributors,” Azmi urged.

With the mandatory EPF contributions for non-citizens officially kicking off, PGIRM is pressing policymakers to reevaluate these structural imbalances and provide fairer, more transparent avenues for local contributors navigating financial hardships.

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Source: Harian Metro
Source: Pertubuhan Gagasan Inovasi Rakyat Malaysia | Facebook
Source: Pertubuhan Gagasan Inovasi Rakyat Malaysia | Facebook