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Employees’ Social Security (Minimum Average Monthly Wage) Regulations 2022 comes into operation on 1 January 2023

13 October 2022

The Employees’ Social Security (Minimum Average Monthly Wage) Regulations 2022 [P.U.(A) 323/2022] (“the Regulations”), which was gazetted on 11 October 2022, will come into operation on 1 January 2023. Consequently, the Employees’ Social Security (Minimum Average Monthly Wage) Regulations 2014 will be revoked.
 
The Regulations seek to increase the minimum average monthly wage1 for an insured person for the purpose of invalidity pension2 referred to in subsection 20(2) of the Employees’ Social Security Act 1969 (“SOCSO Act”), or the survivors’ pension3 referred to in paragraph 4 of the Eighth Schedule of the SOCSO Act, from RM950.00 to RM1,100.00.
 
The new minimum average monthly wage shall apply to an insured person if the rate of the invalidity pension or survivors’ pension received on 31 December 2022 by the insured person or his dependents (as the case may be), is less than RM550.00.
 
Invalidity pension under the SOCSO Act
 
Pursuant to section 20(1) of the SOCSO Act, an insured person who is eligible for invalidity pension shall be paid: 
  1. a basic monthly pension equal to 50% of his average monthly wage, increased by 1% of the average monthly wage for every 12 months’ contributions paid in excess of the first 24 months, in respect of him during the period falling between the date when contributions first become payable by him under this Act and the date on which he submits a notice of invalidity, subject to the maximum of 65% of the average monthly wage if he has completed the full qualifying period as prescribed under subsection 17(2) of the SOCSO Act; or 

  2. a basic monthly pension equal to 50% of his average monthly wage if he has completed the reduced qualifying period as prescribed under subsection 17(3) of the SOCSO Act. 
Survivors’ pension under the SOCSO Act
 
Pursuant to the Eighth Schedule of the SOCSO Act, the rate of survivors’ pension payable is as follows: 
  1. the daily rate of survivors’ pension shall be a basic amount equivalent to 50% of the insured person’s average monthly wage, increased by 1% of the average monthly wage for every 12 months contributions paid in excess of the first 24 months, but subject to the maximum of 65% of the average monthly wage in respect of him during the period between the date when contributions first become payable by the insured person and the date of his death, divided by the number of days in the month in which the pension is paid or payable where the insured person has not attained 60 years of age but has completed the full qualifying period as prescribed under section 17A of the SOCSO Act; or 

  2. the daily rate of survivors' pension shall be an amount equivalent to fifty per cent of his average monthly wage divided by the number of days in the month in which the pension is paid or payable where the insured person has not attained 60 years of age but has completed the reduced qualifying period as prescribed under section 17A of the SOCSO Act. 
Comment
 
The increase in the minimum average monthly wage for the purposes of determining invalidity pension and survivors’ pension payable under the SOCSO Act from 1 January 2023 is welcomed and timely. In fact, it may even be said to be overdue as the amount has not been increased since the Employees’ Social Security (Minimum Average Monthly Wage) Regulations 2014 came into force retrospectively on 1 January 2012.
 
Alert by Foo Siew Li (Partner) and Grace Mah (Associate) of the Employment Practice of Skrine
 
 
1 The term “average monthly wage” refers to the average of assumed monthly wage corresponding to the last 24 monthly contributions in respect of the insured person which have been paid (i) immediately before the month in which he submits a notice of invalidity (for invalidity pensions);  or (ii) immediately before the date of the insured person’s death (for survivors’ pensions).
2 Pursuant to section 16 of the SOCSO Act, an insured person shall be considered as suffering from invalidity, if, by reason of a specific morbid condition of permanent nature, he is incapable of engaging in any substantially gainful activity. An insured person suffering from invalidity shall, unless he has attained 60 years of age, be entitled to receive invalidity pension if he has completed a full or reduced qualifying period as specified under section 17 of the SOCSO Act.
3 Pursuant to section 20A of the SOCSO Act, if, inter alia, an insured person who is in receipt of invalidity pension dies, survivors pension shall be payable to (i) the widow or the widower during life; or (ii) each child until marriage or until he attains the age of 21 years, whichever occurs earlier.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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