Employee’s Provident Fund (EPF) in Malaysia

Today I wish to share with my Malaysian readers and those applicable on how important it is to name your EPF beneficiary or update the nomination. Life is so unpredictable and therefore it is only wise if we do the needful before it is too late to regret. A friend of mine gave me these pointers long back and I think may be useful to the others out there as these little things can be often forgotten or procastinated. Have a good read and hopefully you would do the necessaries in due course…

*EMPLOYEE’S PROVIDENT FUND (EPF)* (In Malaysia)

This is an important reminder on EPF beneficiaries. It would only take a few minutes of your precious time to read the importance of naming your beneficiary/s or updating your EPF beneficiary nomination.
1) Scenario, Imagine this:
An EPF contributor with a non-working wife and 3 school-going  children. He died unexpectedly of a heart attack. He has been contributing to the EPF since he started work as an engineer about 25 years ago and have a sizeable amount of savings. However, the widow approaches the EPF for the savings she is informed that he had named his 1st girlfriend as the beneficiary and never got to update his nomination. Therefore, the widow is not entitled to a cent of the money. (In case of Muslims, there is still recourse under the Syariah Laws) For Non-Muslims, however, there is real concern that your life-long savings may not reach your dependants.) The above scenario may seem unlikely to you but such cases are very common.

2) Findings of the EPF.
Many EPF contributors either do not name any beneficiary or else fail to update their nomination as conditions warrant. As it stands, about 76% of EPF’s 8.51 million members have not made any nomination. And out of the 24% who have, many have not updated their nomination. All your savings and the dividends accumulated over the years may not go to those who need it the most if you do not name a beneficiary or do not update your nomination.

What happens if:-
a) Failure to make a nomination.
If an EPF member has not made any nomination, his savings will be distributed in accordance to the law:

Letters of Administration (LA)
In general, when no nominee is named, the member’s family will have to produce what is known as LA and submit this to the EPF in order to withdraw the savings. (The LA authorizes the person appointed to act as administrator of the estate of the deceased member. This involves employing the services of a lawyer who will make the relevant petitions to court to get the LA. The whole process takes 8 to 12 months or longer if more than one person decides to obtain the LA).

Grant of Probate (Probate)
If the member had made a will, the member’s family will have to produce what is known as Probate and submit this to the EPF. (The Probate is an authorization by the court to the executor named in the will to administer the distribution of the estate of the deceased member).

Distribution Order
If the money in question does not exceed RM 600,000 (and there is no land involved), the family of the deceased can then approach the Public Trustee (Amanah Raya) to obtain a Distribution Order.
b) Consequence of failing to update nomination
If the member does not update his nomination, whoever the EPF contributor has named as his or the beneficiary in the Form KWSP 4 (AHL) will receive the member’s entire savings. Therefore, the spouse and family of the deceased will receive nothing if the contributor has named someone else, his friend, as his EPF beneficiary. This friend will inherit his savings even if the contributor had named his spouse and children as beneficiaries to his property, including his EPF savings, in a will made after the EPF nomination.

c) *Muslim contributors*
They are governed by the inheritance regulations under the Syariah Laws. The term “beneficiary” does not apply to the person nominated by a Muslim. The nominee in effect only acts as an executor (wasi) of the contributor’s savings. Upon the contributor’s death, this executor has a duty to distribute the
deceased’s property in accordance with Faraid (inheritance) Laws.

3. *How does one make a nomination or update a previous one*?
You can do it by completing the Form KWSP 4 (AHL) which can be obtained at the EPF offices. You have to fill in a new KWSP 4 with the name of the person you now want t o inherit your EPF savings. The new form will automatically cancel your previous nomination…… The advantages of naming a beneficiary and keeping this nomination updated are enormous. It not only ensure that your savings will go to those who need it most, but also guarantees speedy payment to your loved ones in such a time of need. If all
the documents are in order, your nominee will get your EPF savings in about a month.

4.*Locations of EPF Offices*
* Menara Komtar, Paras 47, Penang
* Wisma KUWASA, Ground Floor, Jalan Raja Laut, Kuala Lumpur.
* Bangunan Yayasan Selangor, near AMCOP Mall, Petaling Jaya
* Wisma Peransang, Shah Alam, Selangor Darul Ehsan.
* Wisma Emerald, Jalan Meru, Klang, Selangor Darul Ehsan.
* Bangunan EPF, Johor Bharu (center of the city, opposite Wisma Imigresen)

Note: If there is any new update, kindly post a comment below.

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About Priya Manikam

Im just a simple person who suddenly feels like blogging! Im currently living a million miles away from home and is very passionate about writing, travelling and food/cooking all the works...
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