The Employee Provident Fund (EPF) is a crucial component of retirement planning in Malaysia. Employers and employees both contribute to this fund, calculated as a percentage of the employee’s salary.
However, there are instances where the default contribution rates need to be adjusted. This is where the 'Custom Rate' and 'Custom Value' options come into play. This article explains the concepts of 'Add to Default' and 'Overwrite' and how they impact both employees and employers.
Custom Rate
Add to Default
Definition: 'Add to Default' allows adding a custom contribution rate on top of the default EPF rate. The default rate follows the EPF table, while the custom rate is based on an exact percentage.
How it works:
- Employee: Default rate of 11% + custom rate of 3% = total rate of 14%.
- Employer: Default rate of 12% (or 13%) + custom rate of 2% = total rate of 14% (or 15%).
NOTE:
The default employer rate depends on the employee's basic salary (whether it is less or more than RM 5,000).
Overwrite
Definition: 'Overwrite' replaces the default contribution rate with a custom rate. This calculation is based on an exact percentage rather than following the EPF table.
How it works:
- Employee: Default rate of 11% is overwritten with a custom rate of 14%.
- Employer: Default rate of 12% (or 13%) is overwritten with a custom rate of 16%.
Custom Value
Add to Default
Definition: 'Add to Default' allows setting a fixed custom value in addition to the default percentage rate.
How it works:
- Employee: The total EPF contribution includes both the default percentage and the fixed custom value.
- Employer: The total EPF contribution includes both the default percentage and the fixed custom value.
Overwrite
Definition: 'Overwrite' sets a fixed custom value to entirely replace the default percentage rate.
How it works:
- Employee: The EPF contribution is solely based on the fixed custom value.
- Employer: The EPF contribution is solely based on the fixed custom value.
Example of EPF Calculation in BrioHR
Let's consider an employee named Ahmad:
Basic Salary: RM 9,180 (salary > RM 5,000, EPF Employer default rate is 12%)
EPF Category: Category A
Employee EPF: 11% (Default) - unchanged
Employer EPF: 17%
There are two ways to set up Ahmad's additional EPF contribution in BrioHR using the "Custom Rate" option:
A) Custom Rate - Add to Default
- EPF Employer Custom Value (%): Add 5%
- 12% default rate (follows EPF Table) + 5% exact calculation
12% default rate from table: RM 1,104
5% exact calculation: RM 9,180 x 5% = RM 459
Total Employer EPF: RM 1,563
12% amount from PART A - EPF Table
B) Custom Rate - Overwrite
- EPF Employer Custom Value (%): Add 17%
- The Employer EPF amount is the exact calculation:
- RM 9,180 x 17% = RM 1,561
How to Edit Custom EPF Settings
Modify in Bulk
- Navigate to HR Lounge > Payroll.
- In the Payroll Dashboard:
- Locate Payroll Employee List > Bulk Download.
Modify Individually
- Navigate to the employee's profile page.
- On the left tab, click the Payroll menu.
- Click the pencil icon under the Statutory Contributions section.
- Click Save once done.
For details on modifying an individual's payroll information, please refer to the article: How to Update Employee's Personal Payroll Details
Need Assistance?
If you have any questions or require assistance, please reach out to our support team via live chat or email us at support@briohr.com.