Over 7 million employees in Malaysia have registered and are covered by the Social Security Organisation (SOSCO) scheme. Although widely known as a protective scheme for working individuals upon registration, there are details such as eligibility, benefits, contribution calculation and withdrawal that are yet to be fully understood. Thus, we have gathered the information regarding SOSCO in Malaysia in this article for an easier understanding.
What is SOSCO?
According to PERKESO, the Social Security Organisation (SOCSO) is established as one of the government departments under the Ministry of Human Resources to administer, implement and enforce the Employees’ Social Security Act 1969 and the Employees’ Social Security (General) Regulations 1971. Since 2017, self-employed individuals are also included in the scheme, governed by the Self-Employment Social Security Act 2017 and the updated Employment Insurance System Act 2017.
The three core principles of SOSCO are:
“Solidarity is the cardinal value of social protection”, generally, the contribution to SOSCO is allocated to a solidarity fund. Whereby, the purpose of SOSCO is to redistribute the capital towards people in need, such as disabled or invalid. It is a common practice that all contributors have agreed and united in the sense of such allocation and redistribution of funds.
The scheme to calculate SOSCO contribution in Malaysia is built on the pay-as-you-earn approach, which depends on the employee’s monthly salary. This brings us to the second core principle of SOSCO.
Replacement of Income
This core principle applies as the determining factor to calculate SOSCO contribution in Malaysia is related to the amount employees’ salary. This is to ensure the contribution to SOSCO would not affect an employee’s financial status if they are suffering from disabilities or invalidity. Besides that, if a case of death of an insured person took place, replacement of income would be provided through monthly pensions to the family or dependants.
Equality refers to the state of being equal, especially in status, rights, or opportunities. Govern by this core principle and the concept of social justice, the coverage of SOSCO is made to encompass all employers and employees who registered to be insured.
The ideal state of social security is where no accident nor harm occurred throughout the career of an employer or employee until retirement. However, where an ideal state is not achievable, it is for a solidarity fund like SOSCO to provide support for those who suffer. Furthermore, the payment of benefits made eligible to employees or dependant to ensure all treated equally under the act and regulation of that governs SOSCO.
Who should register for SOSCO?
SOCSO is widely offered as one of the employee benefits in Malaysia, that serves to provide protection to all eligible employees in the event of accident or disability. According to the Employees’ Social Security Act 1969, an employee is any person who is employed for wages paid under a contract service or apprenticeship with an employer. The coverage of SOSCO includes a working person who is a Malaysian or permanent resident of Malaysia that works in the country.
The registration of a SOSCO account could be done through the official portal, where one could register as employer or employee/self-employed.
Benefits of SOSCO
In general, SOSCO is established to provide free medical treatment, facilities for physical or vocational rehabilitation, and financial assistance to registered individuals, who suffer from disability or invalidity that have reduced their abilities to work. If cases of death occur, the family or dependants will be financially supported through monthly pensions provided by SOSCO.
To date, SOSCO has coverage that encompass:
Employment Injury Scheme
- Medical Benefit
- Temporary Disablement Benefit
- Permanent Disablement Benefit
- Constant-Attendance Allowance
- Facilities For Physical Or Vocational Rehabilitation
- Dependants’ Benefit
- Funeral Benefit
- Education Benefit
- Invalidity Pension
- Invalidity Grant
- Constant-Attendance Allowance
- Survivors’ Pension
- Facilities For Physical Or Vocational Rehabilitation And Dialysis
- Funeral Benefit
- Education Benefit
Employment Injury Scheme For Foreign Worker (updated on 1 January 2019)
- Must possess valid passport and Special Pass for new foreign workers; or
- Must possess employment pass and Temporary Employment Visit Pass or a valid employment pass for existing foreign workers, whichever is applicable
Domestic Workers (Updated on 1 June 2021)
- A domestic worker is a person employed exclusively in the work or in connection with work of a private dwelling house and not of any trade, business or profession carried on by the employer in such dwelling house.
Self-Employment Social Security Scheme (Updated on 1 January 2020)
- Malaysian citizen / permanent resident without age limit;
- Individuals who work for themselves to earn a living from these sectors:
- Good and Food Transport
- Accommodation Premises
- Online Business
- Information Technology
- Data Processing
- Professional Services
- Support Services
- Household Services
- Beauty and Healthcare
Free Health Check-Ups
Another interesting but lesser-known benefit of SOCSO is the free check-up to its members who are 40 years old and above under the SOCSO Health Screening Programme (HSP). All SOCSO members are qualified for HSP to screen for diseases such as cardiovascular diseases, diabetes as well as cervical and breast cancer at the registered panel clinics of SOCSO.
SOCSO’s Contribution: Contribution Table & Rates
The most frequently asked question: how to calculate SOSCO contribution in Malaysia?
As we mentioned earlier, the amount of contributions into SOSCO depends on the employee’s wage, however the contribution should be made by both the employer and the employee. The method to calculate SOSCO contribution in Malaysia is rather easy, where two types of contribution could be made.:
First Category: Employment Injury Scheme and the Invalidity Scheme
The rate of contribution under this category comprises 1.75% of employer’s share and 0.5% of employees’ monthly wages according to the contribution schedule.
Second Category: Employment Injury Scheme only
The rate of contribution under this category is 1.25% of employees’ monthly wages, payable by the employer, based on the contribution schedule.
For more rates and references to calculate SOSCO contribution in Malaysia, you may view from the official table published by PERKESO: Rate of contribution for Employees’ Social Security Act 1969 (Act 4
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