Basreen AhmadMarwan Hadiid

Aliff Adzuan

Definition Government insurance providing coverage for

the unemployed, the injured and the old, usually financed by contribution from employers or employees, as well as general government revenue,

Government assistance program for the poor. Cover all range of government provided

pension, disability payment, unemployment benefits and health benefits.

Reduce suffering and to provide financial guarantees and protection to families.

Social Insurance in Malaysia Malaysia’s social security system is known as

SOCSO or PERKESO. In Malay, it is known as Pertubuhan Keselamatan Sosial.

Provides assistance in terms of regular payments from the government in the event of unemployment, sickness or death.

E.g.; medical benefit, temporary and permanent disablement benefit, constant attendance allowance, dependent benefit, funeral benefit, rehabilitation benefit and education benefit, survivors’ pension, invalidity grant.

Social Insurance in Malaysia

The Employment Provident Fund (EPF) also known as Kumpulan Wang Simpanan Pekerja (KWSP) supply benefits which are predominantly for retirement purposes, but also provides withdrawal schemes for specific purposes.

Under provision of the Ministry of Human Resources.

Fifth Pillar

Personal

SavingsFourth Pillar

Employee Provident Funds

Third PillarPension Scheme

Second PillarSocial Security Organization

First PillarFamily Support

Five-Pillar of Malaysia Social Protection Scheme

Civil Service Pension SchemeObjective

To acknowledge and appreciate the excellent service, with loyalty, dedication and honesty, rendered to the Government by a personnel.

As a bondage for personnel to retain their service with the Government.

To provide the life subsistence for the dependents of personnel who have passed on during the term of service  with the Government or after their retirement.

To develop a form of Compensation Scheme for personnel who are required to retire or passed away due to an injury or contracted a disease because of exposed to harm in the course of carrying out his/her duties.

Civil Service Pension SchemeQualification

Minimum retirement age is 60 years. Minimum 10 years of service is required to be

eligible for a pension. Provision for those who are injured or die

during services.

Type of Pension Benefits1. Service Pension (Monthly Payment)The rate of gratuity and pension to be paid depends on the period of reckonable service and the last drawn salary (substantive) by the officer.  The actual calculation is as follows:

1/600 x number of months of service x corresponding last drawn salary. 

subject to a maximum pension of three fifth (3/5) of the last drawn salary (after a service of 30 years or 360 months of service)

Type of Pension Benefits2. Service Gratuity (Lump Sum Payment)

7.5% x number of months of service x corresponding last drawn salary.

Type of Pension Benefits

3. Disability PensionDisability Pension is and additional benefit given to a Government officer who is required to retire because of health reasons due to:

in the course of performing his official  duty contracting a disease to which he is exposed by

the nature of his duty sustaining an injury due to a travel accident on

condition the injury or disease is not contributed by negligence or misconduct of the officer.

Type of Pension Benefits4. Dependent PensionDependent's Pension is an additional pension benefit given to dependents or a pensioner or officer who dies from injury obtained during the course of performing his official duty or contracting a disease or travel accident on condition:

the officer died in any one of the above conditions

the death of the pensioner or officer occurs within seven years of sustaining the injury or contracting the disease. 

The Armed Forces Fund (LTAT) Its mandatory for all military

personnel who are not commissioned officers.

It’s a defined contribution scheme at a rate of 10% monthly salary employees and 15% from the government as employer.

The age for full withdrawn is 50.

SOCSO/PERKESO Established in 1971 under the Ministry of

Human Resources Problem Statement Enforce employees social Security Act

1969 Protection :

Medical care Cash Benefits Rehabilitation

Concept of SOCSO

Employers LiabilityWhoever employs one or more employees – required to register & contribute monthly for all employees

EmployeeEarns a monthly wage of RM3000 or less

For those whose wage above RM3000 :- Previously registered

must compulsory continue

- Those who are not previously registered, can option to do so

Concept of SOCSO

Coverage :All employee irrespective of the employment status either permanent or temporary

Exemption : Government

employees Domestic servants Self employed Foreign workers

Overview

EMPLOYMENT INJURY SCHEME

Protection for accidents:

- While traveling- Arising out and in the course of employment- Occupational disease

INVALIDITY PENSION SCHEME

- Serious disablement or morbid condition of a permanent nature that is either incurable- Unable to earn at least 1/3 of normal person- 24 hours coverage- Against invalidity or death due to any cause not connected with his employment

Benefits

EISMedical benefitTemporary disablement

benefitPermanent disablement

benefitConstant attendance

allowanceDependant benefitFuneral benefitRehabilitation benefit

IPS Invalidity pension Invalidity grantConstant attendance

allowanceSurvivors pensionFuneral benefitsRehabilitationEducational loan

Key Performance IndicatorIncrease in registered employees

4.98%The number of registered employers in 2013 rose by 4.98% to 906,363 employers compared to 863,338 in 2012

Sources : Annual Report 2013

Key Performance IndicatorIncreasing in Collection contribution

8.29 %Total contributions collected in 2013 increased by RM192.82 million or 8.29% to RM2,518.14 million from RM2,325.32 million in 2012

Sources : Annual Report 2013

Collection of Contribution 2009- 2013

Benefit Recipients 2012-2013

Rate of Contribution

Rate of Contribution (cont)

EPF/KWSP Social security institution formed

according to the Laws of Malaysia, Employees Provident Fund Act 1991 (Act 452)

Provides retirement benefits for members through management of their savings

EPF/KWSPMembers Private and Non-Pensionable Public

Sector employees  March 2015 - 14.29 million members

Mandatory Contribution Contribution is calculated based on the

monthly wages < RM 5000 employees 11%, employer 13% > RM 5000 employees 11%, employer 12%

EPF/KWSPInvestment monthly contributions are invested in a

number of approved financial instruments to generate income.

Investment Panel determines and approves investment activities in line with existing guidelines, policies on risk control and asset allocation.

As of 3rd quarter of 2014  investment income is RM10.32 billion

EPF/KWSPInvestment (cont) Equities contributed RM6.34 billion, an

increase of RM637.05 million from RM5.71 billion

Loans and Bonds contributed RM1.71 billion compared with RM2.27 billion

Malaysian Government Securities contributed

RM6.53 billion increase of 4.06 per cent from RM 6.26 billion

Real Estate and Infrastructure contributed RM439.09 million

EPF/KWSPDividend guarantees a minimum of 2.5% dividend annually For the year 2014 the dividend rate is 6.75% Total payout RM36.66 billion

Benefits Dividend - 2.5% minimum Incapacitation And Death Benefits - payable to

member or guardian. Comes from investment earning not from member saving

Tax exemption up to RM 6000. return on investment also tax exempted

Types of Account

Account 1 70% from contribution

55 years old Incapacitation

Investment

Account 2 30% from contribution

50 years old Purchase house

Educational Hajj ( 1st timer/ once in a lifetime).

Max 3000 or Account 2 balance, whichever is lower

Employer Liability Scheme Both the government as well as the private

employer are liable to provide certain benefits to their employees.

Cover medical benefits, maternity care and pension benefits.

Those covered by SOCSO are excluded from the scheme.

Maternity Benefits Pregnant women are eligible to maternity

benefits from any day within 30 days before the date for the childbirth.

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.

Covered by the labor law under the Malaysian Employment Act of 1955.

Medical Benefits Some large employers provide medical

benefits to the employees through their panel clinics and hospitals.

Government as the employer for the civil servants provides free medical care for the civil servants and their dependents in the public facilities as stated in the General Order for the civil servants.

Unemployment Benefits Currently, there is no unemployment

insurance or unemployment assistance program to help the unemployed in Malaysia.

This is partly due to the continuous economic growth in Malaysia that has led to low unemployment rates.

There is no cash assistance to the unemployed. However, should any of them should fall into poverty which they will be eligible for government assistance programme for the poor.

Social Assistance Scheme Provided by the Ministry of Women, Family

and Community Development. Target disadvantaged group which comprises

allowances for the disabled, elderly, families and children in need and physically disabled.

Currently the government is collecting information, through a project called e-Kasih.