Retirement Letter (Malaysia)
RETIREMENT LETTER
Minimum Retirement Age Act 2012 (Act 753) | Employees Provident Fund Act 1991 (Act 452) | Income Tax Act 1967 (Act 53)
Date: [Letter Date]
To: The Human Resources Director / Employer
[Employer Name]
[Employer Address]
NOTICE OF RETIREMENT
Dear Sir / Madam,
I, [Employee Name] (NRIC: [Employee NRIC]), [Designation], write to formally notify you of my retirement from [Employer Name] effective [Retirement Date].
I have been employed by [Employer Name] since [Commencement Date] and have served the Company to the best of my ability. I provide [Notice Period] of my retirement in accordance with my employment contract / the Employment Act 1955 (Act 265).
Type of retirement: [Retirement Type]
My retirement date of [Retirement Date] complies with the Minimum Retirement Age Act 2012 (Act 753), which establishes 60 years as the minimum retirement age for private sector employees in Malaysia.
TERMINAL BENEFITS
I understand that the following terminal benefits will be processed on or before my retirement date:
1. Annual leave encashment: [Unused Leave Days] days unused annual leave at my last basic daily rate under Section 60(1A) of the Employment Act 1955 (Act 265).
2. Retirement gratuity: [Gratuity]. I note that retirement gratuity paid to an employee retiring at age 55 or above is exempt from income tax under Paragraph 25 of Schedule 6 to the Income Tax Act 1967 (Act 53). I request that the Employer reflect this exemption in my EA Form (Borang EA) submitted to LHDN.
3. EPF Withdrawal: I request that [Employer Name] complete the EPF employer retirement declaration (Perakuan Majikan) to facilitate my full retirement withdrawal under Section 54 of the Employees Provident Fund Act 1991 (Act 452) using Form KWSP 9C (AHL) or the i-Akaun portal. I request that all outstanding EPF contributions up to my last day of service be remitted to KWSP by the statutory due date.
4. All other statutory entitlements and contractual benefits accrued and unpaid as at the retirement date.
I will ensure a complete and orderly handover of my responsibilities, client relationships, and documentation before my retirement date. I am grateful for the opportunities provided by [Employer Name] during my tenure.
I request the Employer to kindly acknowledge receipt of this retirement letter and confirm the terminal benefits payable in writing.
Yours sincerely,
Retiring Employee
________________
Signature
Acknowledged by Employer (HR / Authorised Representative)
________________
Signature
What Is a Retirement Letter (Malaysia)?
A Retirement Letter (Malaysia) in Malaysia a Retirement Letter in Malaysia is a formal written notice given by an employee to the employer, or by the employer to the employee, confirming the employee's retirement from employment in compliance with the Minimum Retirement Age Act 2012 (Act 753). The Act, which came into force on 1 July 2013, establishes 60 years as the minimum retirement age for employees in the private sector in Malaysia, subject to any collective agreement or employment contract that specifies a higher retirement age.
The Minimum Retirement Age Act 2012 applies to all employees engaged under a contract of service in the private sector in Malaysia, including employees covered by the Employment Act 1955 (Act 265) and those earning above the RM4,000 threshold. The Act does not apply to employees in the public sector, employees on fixed-term contracts of two years or less, domestic servants, or employees covered by a collective agreement that specifies a higher minimum retirement age. An employer who compulsorily retires an employee before age 60 — except on grounds of ill health or the specific exemptions under the Act — commits an offence under Section 5 of the Minimum Retirement Age Act 2012 and is liable to a fine of not more than RM10,000 on first conviction.
A Retirement Letter in Malaysia triggers several important financial entitlements. An employee retiring at age 60 becomes eligible to make a full withdrawal of accumulated savings from their EPF Account 1 (Akaun 1) and Account 2 (Akaun 2) under the Employees Provident Fund Act 1991 (Act 452) by submitting EPF Withdrawal Form KWSP 9C (AHL). The Social Security Organisation (SOCSO/PERKESO) under the Employees' Social Security Act 1969 (Act 4) provides Invalidity Grant and Invalidity Pension for insured persons who retire due to invalidity before age 60, while the Employment Insurance System (EIS) under the Employment Insurance System Act 2017 (Act 800) provides Reduced Income Benefit for employees who accept the Voluntary Separation Scheme (VSS) before retirement age.
For income tax purposes under the Income Tax Act 1967 (Act 53), retirement gratuity payments made to employees who retire at age 55 or above, or on account of ill health, are exempt from income tax under Paragraph 25 of Schedule 6 to the Income Tax Act 1967. The LHDN has clarified that this exemption applies once in an employee's lifetime for the same employer.
The legal framework governing the Retirement Letter (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Retirement Letter (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Employment Act 1955 (Act 265) sets the foundational requirements.
When Do You Need a Retirement Letter (Malaysia)?
A Retirement Letter is required in Malaysia whenever an employee reaches retirement age and formally notifies the employer of retirement, or when the employer initiates the retirement of an employee who has reached the minimum retirement age.
A Retirement Letter is needed when an employee in the private sector reaches 60 years of age — the minimum retirement age under the Minimum Retirement Age Act 2012 (Act 753) — and wishes to retire, so that the employer can process terminal benefits, initiate EPF withdrawal procedures, and comply with the notice requirements in the employment contract.
A Retirement Letter is required when an employee and employer mutually agree to voluntary early retirement under a Mutual Separation Scheme or Voluntary Separation Scheme (VSS), and the retirement is to be recorded as retirement rather than termination for income tax exemption purposes under Paragraph 25 of Schedule 6 to the Income Tax Act 1967.
A Retirement Letter is needed when an employee in the public sector who has reached the age of 58 (the mandatory retirement age for most civil servants under the Pensions Act 1980) or 60 (for certain categories under subsequent amendments) formally confirms retirement to the employer for pension calculation purposes under the Pensions Act 1980 (Act 227).
A Retirement Letter is required when a director of a Bursa Malaysia-listed company reaches the retirement age specified in the company's Constitution and the retirement must be documented for SSM filing under Section 236 of the Companies Act 2016 and for Bursa Malaysia announcement purposes under the Main Market Listing Requirements.
A Retirement Letter is needed when an employee wishes to begin the EPF full withdrawal process under the Employees Provident Fund Act 1991 — the EPF requires documentary evidence of retirement (including the employer's written acceptance of the retirement notice) before processing Age 55/60 Retirement Withdrawal claims on Form KWSP 9C (AHL) or the online i-Akaun portal.
What to Include in Your Retirement Letter (Malaysia)
A valid Malaysia Retirement Letter must contain the following essential elements to activate the employee's retirement entitlements and comply with the Minimum Retirement Age Act 2012.
Parties: The employee's full legal name, NRIC number (for EPF withdrawal verification), designation, department, date of commencement of employment, and the employer's full legal name with SSM registration number.
Retirement Date: The specific date of retirement, expressed in DD/MM/YYYY format, which must not be before the employee's 60th birthday unless the retirement is under an approved VSS or the employee was employed on specific contractual terms before the Minimum Retirement Age Act 2012 came into force.
Notice Period: The notice period given by the employee or employer, in accordance with the employment contract or Section 12 of the Employment Act 1955 (Act 265) for employees covered by the Act.
Terminal Benefits Summary: A statement of the terminal benefits to which the retiring employee is entitled, including: prorated annual leave encashment, any contractual gratuity payment, repatriation allowance for foreign nationals, and any retirement gift or ex-gratia payment. These benefits should be expressed in Malaysian Ringgit (RM).
Tax Exemption Reference: A statement confirming that the retirement gratuity is exempt from income tax under Paragraph 25 of Schedule 6 to the Income Tax Act 1967 (Act 53) — applicable where the employee retires at age 55 or above or on grounds of ill health — and that the employer will reflect this exemption in the employee's EA Form (Borang EA) submitted to LHDN.
EPF Withdrawal Notification: Confirmation that the employer will complete the EPF employer retirement declaration to support the employee's full withdrawal under the Employees Provident Fund Act 1991 (Act 452), and that all outstanding EPF contributions up to the last day of service will be remitted to KWSP by the due date.
Signatures: Signed by the employee and acknowledged by an authorised representative of the employer, with dates in DD/MM/YYYY format.
Additional compliance elements for a Retirement Letter (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Retirement Letter (Malaysia) (Malaysia) [Legal document template]. Forms Legal. https://forms-legal.com/malaysia/employment/letters/retirement-letter-malaysia
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title = {Retirement Letter (Malaysia) (Malaysia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/malaysia/employment/letters/retirement-letter-malaysia}},
note = {Free legal document template. Based on Employment Act 1955 (Act 265)}
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Frequently Asked Questions
The minimum retirement age in Malaysia's private sector is 60 years, established by the Minimum Retirement Age Act 2012 (Act 753) which came into force on 1 July 2013. Before the Act, the common practice was to retire employees at age 55 or 56 in many Malaysian companies. Under Section 4 of the Minimum Retirement Age Act 2012, an employer who compulsorily retires an employee before age 60 without the employee's written consent — except where the employee is ill or the employment contract lawfully specifies a higher retirement age — commits an offence punishable by a fine of not more than RM10,000. The minimum retirement age of 60 applies to employees in the private sector. For civil servants in the Malaysian public sector, the retirement age is regulated separately — currently 60 years for most general service officers under the Public Services (Retirement) Rules or 58 years for certain designated categories, as amended from time to time by the Public Service Department (Jabatan Perkhidmatan Awam, JPA).
A retiring employee in Malaysia is entitled to the following terminal benefits depending on the employment contract and applicable statutes. Prorated annual leave: unused annual leave entitlement under Section 60(1A) of the Employment Act 1955 (Act 265) must be encashed at the employee's last basic daily rate. Contractual gratuity: many Malaysian employers pay a retirement gratuity of one month's salary per year of service or a fixed sum, which is tax-exempt under Paragraph 25 of Schedule 6 to the Income Tax Act 1967 (Act 53) where the employee retires at age 55 or above. EPF full withdrawal: the employee may withdraw all savings from EPF Account 1 and Account 2 using Form KWSP 9C (AHL) or the i-Akaun online portal under the Employees Provident Fund Act 1991 (Act 452). SOCSO invalidity pension: if the employee retires due to invalidity before reaching age 60, they may claim the Invalidity Pension under the Employees' Social Security Act 1969 (Act 4) from PERKESO.
Retirement gratuity paid to a Malaysian employee is exempt from income tax under Paragraph 25 of Schedule 6 to the Income Tax Act 1967 (Act 53) provided the employee retires at age 55 or above, retires at any age on grounds of ill health, or retires under a company's pension scheme approved by the Director General of Inland Revenue. The tax exemption under Paragraph 25 applies once per employment relationship — meaning an employee who retires and then rejoins the same employer cannot claim the exemption again on a subsequent retirement. The LHDN has issued Public Ruling No. 2/2010 (Termination of Contract of Employment) clarifying the distinction between exempt retirement gratuity and taxable compensation payments. Employers must reflect the exempt amount correctly in the employee's EA Form (Borang EA) submitted by 28 February following the year of retirement, using the correct exemption code. Payments that do not qualify as retirement gratuity — such as compensation for loss of employment — are separately assessed for the RM10,000 per year of service exemption under Section 13(1)(e) of the Income Tax Act 1967.
An employer in Malaysia may compulsorily retire an employee who has reached the minimum retirement age of 60 years under the Minimum Retirement Age Act 2012 (Act 753) without it constituting a dismissal under the Industrial Relations Act 1967 (Act 177). An employer who compulsorily retires an employee before age 60 without the employee's written consent — unless the employment contract or collective agreement specifies a higher retirement age — commits an offence under Section 5 of the Minimum Retirement Age Act 2012 and may also be liable for constructive dismissal before the Industrial Court of Malaysia. The employer cannot compulsorily retire an employee at an age below 60 merely by inserting a clause in the employment contract — such a clause would be void as contrary to the mandatory provisions of Section 4 of the Minimum Retirement Age Act 2012. An employee who is compulsorily retired before age 60 without consent may file a dismissal claim under Section 20 of the Industrial Relations Act 1967 within 60 days of the dismissal date.
Upon retirement at age 60 in Malaysia, an EPF member may make a full withdrawal of all savings accumulated in EPF Account 1 (Akaun Persaraan, 70% of contributions) and Account 2 (Akaun Sejahtera, 30% of contributions) under the Employees Provident Fund Act 1991 (Act 452). The withdrawal application is made using EPF Form KWSP 9C (AHL) or through the i-Akaun online portal at kwsp.gov.my. The applicant must provide the employer's retirement declaration letter, a copy of the NRIC, and the EPF membership card. Under Section 54(1) of the EPF Act 1991, the EPF Board is required to pay out the accumulated savings within the prescribed period after receiving a complete withdrawal application. Members may also choose to make a partial withdrawal at age 55 (for Account 2 only) and retain Account 1 savings for higher returns. Withdrawal proceeds are not subject to income tax under Paragraph 30A of Schedule 6 to the Income Tax Act 1967.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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