Planit:EPF Contributions

From Planipedia
Jump to: navigation, search


Planit.gif Learn by Watching!


PlanPlus Planit.jpg
There is more than one way to learn about PlanPlus Planit. Check out our other Training options, from structured tracks around planning types, to self-serve, mix-and-match topics.



In this Video you will Learn...
How do I properly show employee and employer contributions to EPF Accounts?
• Calculation of contributions
• Employee savings on Assets and Liabilities
• Savings screen, employer contribution to Account I
• Cash Flow screen, employer contribution to Account II

Keep on Track! Continue training on...
Assets and Liabilities Screen Cash Flow Management Screen
Savings Screen Integrated Planning
Modular Planning Life Planning

Other Related Topics
EPF Tax Deductions Employer Contributions Introduction to the Savings Screen
Summary Assets and Liabilities Summary Cash Flow


The material in this video may differ somewhat from what you see on your site due to difference in version, jurisdiction, corporate content or access level. Regardless of these differences most of the core functions are consistent across all sites, so you'll be able to benefit by and large from what you learn in this video.


Planit.gif Learn by Reading!



Employee Provident Fund (EPF) Malaysia

In Malaysia the Employee Provident Fund is a program that allows people to accumulate savings for retirement in Account I and accumulate for living expenses such as housing, education and healthcare expenses in Account II. While the calculation of the EPF is fairly straight forward, the handling of these savings present some challenges when doing long term planning.

For purposes of the PlanPlus Planit, the approach we take is to only recognize the EPF Retirement contributions into Account I as savings for long-term goals. The employee contributions to Account II are treated like normal lifestyle style expenses and thus are not entered as specific expenses.

When it comes to the employer contributions to the EPF accounts, our approach is to enter the employer contribution to the EPF Account I as a savings amount on the savings screen and enter the employer contributions to Account II as miscellaneous income since these contributions are in fact like additional income for the employee to fund their lifestyle expenses.

Let’s look at some actual screen shots that illustrate this approach.

EPF Retirement Savings (Account I)

1. Enter the employee contribution to EPF Retirement Savings in the Detailed Cash Flow screen.

  • Using a client income of 300,000 RM the contribution would be 300,000 x 11% x 70% = 23,100 RM
  • Using a spouse income of 180,000 RM the contribution would be 180,000 x 11% x 60% = 13,860 RM

Epf1.jpg

When you enter these EPF Retirement Savings on the detailed cash flow screen, they will appear on the summary Cash Flow Management Screen as seen here:

Epf2.jpg

2. To include the employer contribution to the EPF Retirement Savings in the long-term projections, enter the employer’s contribution on the Savings Screen. To do this, click “Edit” on each of the EPF Retirement Savings records

Epf3.jpg

This will open the record and give you access to the “Employer Amount” field.

  • Using a client income of 300,000 RM the employer contribution would be 300,000 x 12% x 70% = 25,200 RM
  • Using a spouse income of 180,000 RM the contribution would be 180,000 x 12% x 70% = 15,120 RM

Epf4.jpg

Once you have entered the Employer contributions for the Client and Spouse, the Savings Screen illustrates both the Employee and Employer contributions as seen below.

Epf5.jpg

EPF Account II Employer Contributions

As explained above, we only recognize the employer contributions to EPF Account II since we need to recognize this additional cash flow to fund living expenses. We enter these under “Miscellaneous Income” on the Detailed Cash Flow screen.

  • Using a client income of 300,000 RM the employer contribution would be 300,000 x 12% x 30% = 10,800 RM
  • Using a spouse income of 180,000 RM the contribution would be 180,000 x 12% x 30% = 6,480 RM

Below you’ll see the entries for these amounts:

Epf6.jpg

The Account II contributions will appear on the summary Cash Flow Management Screen as part of the total Income number.