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The Self Employment Social Security Bill 2016 (“Bill”) was tabled for first reading before the Dewan Rakyat yesterday. The Bill proposes to make it mandatory for all self-employed Malaysians in certain industries to contribute to a fund similar to the Social Security Organisation (SOCSO).

Currently, the Bill is intended to apply to self-employed Malaysians (or permanent residents of Malaysia) who are in the “service of carriage of passengers”. These category of individuals can select the amount of monthly earnings they wish to insure. The minimum amount of selected insured monthly earnings is RM1,050 (which has a required contribution rate of RM13.10 per month), and the maximum selected insured monthly earning is RM3,950 (which has a required contribution rate of RM49.40 per month). The proposed contribution rates for the range of selected insured monthly earnings are set out below:

Contribution rates under the Bil

Contribution rates under the Bill

Based on the selected insured monthly earnings, contributors will have a fixed amount of “selected insured daily earnings” which amounts to 1/30th of the selected insured monthly earnings. For example, for a person with a selected insured monthly earning of RM1050, their selected insured daily earning will be RM35.

This selected insured daily earning will be used to calculate the benefits received by the contributors, for example:

  • For temporary disablement, contributors can receive 80% of their selected daily insured earnings per day
  • For permanent partial disablement, contributors can receive 90% of their selected insured daily earnings, multiplied by the percentage of loss of earning capacity per day; and
  • For permanent total disablement, contributors can receive 90% of their selected daily insured earnings per day

To illustrate, a self-employed person who selects an insured monthly earning of RM1050 will receive RM28 per day for temporary disablement:

Illustration of daily benefit rate based on a selected insured monthly earning of RM1050

Illustration of daily benefit rate based on a selected insured monthly earning of RM1050

If a self-employed person suffered a disablement due to a self-employment injury which resulted in his death, his/her spouse will receive 60% of the daily rate of the permanent total disablement benefit. His/her children would receive 40%.

Other benefits under the scheme include funeral benefits and medical benefits. The Bill also proposes education benefits for the child of a self employed person who dies or is permanently disabled as a result of a self-employment injury.

Those who are required to contribute under the Bill but fail to do so will be liable to a fine not exceeding RM10,000.00, imprisonment for up to 2 years, or both.

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