Throughout our lives, we dedicate ourselves to the pursuit of supporting our livelihoods. It's a journey where our daily efforts, though not always glamorous, lay the foundation for the life we aspire to lead. In this ongoing pursuit, our earnings are more than just numbers on a paycheck – they embody the dedication, sweat, and aspirations that shape our unique path.
Imagine a scenario where, in your absence, the hard-earned cash you've worked tirelessly for needs to find its way to the right hands, perhaps your family or loved ones. That's where the Employees Provident Fund (EPF) nomination steps in, ensuring that, in the event of unforeseen circumstances such as your passing, your money will go where it should, providing crucial support to those you hold dear during challenging times.
What happens to my EPF savings after my demise?
The EPF nomination is a critical aspect of financial planning that allows you to designate individuals who will inherit your accumulated funds in the event of your demise.
When you make a nomination, you entrust the nominee with the responsibility of managing your EPF savings after your demise.
If you fail to make a nomination, your beneficiaries can still claim your savings before you reach the age of 100 (if they are still alive), following an appropriate claims process according to EPF procedures. However, beneficiaries may need to undergo a lengthy and complicated process to submit additional documents to access these savings.
After reaching the age of 100, your savings in the EPF will be transferred to the Registrar of Unclaimed Moneys (UMR) under the Accountant General's Department of Malaysia, and the claims process is subject to Section 13 of the UMR Act (1965).
Maintaining the relevancy of your nomination is paramount. This simple step is a crucial in the world of managing your finances – it's like having a clear plan for where your money should go when the time comes.
Why make an EPF nomination?
It's the key to making sure your money goes where it should. Understanding EPF nomination isn't just about following the rules; it's a smart way to protect the future of your earnings. Here are a few reasons why putting some thought into your EPF nomination is a big deal in your financial planning.
1. To take care of your loved ones
EPF nomination acts as a financial safety net for your dependents, offering them a sense of security in the case of your untimely demise. By nominating your family members or dependents, you allow them to access the funds seamlessly, thereby providing crucial financial support during challenging times.
2. To streamline fund distribution
Without a valid nomination, the process of distributing EPF funds can become complex and time-consuming. A clear and updated nomination ensures that the funds are distributed efficiently, minimising hassle for your family when they need the money the most.
3. Flexibility in nominations
EPF nominations offer flexibility, allowing you to update and modify your nominees as your life circumstances change. This is particularly important in the case of marriage, divorce, or the birth of children. Regularly reviewing and updating your nomination ensures that your EPF benefits align with your current family structure and preferences.
4. Peace of mind
Knowing that you have taken the necessary steps to secure the financial future of your dependents can provide unparalleled peace of mind. EPF nomination is a proactive way to demonstrate your commitment to the welfare of your family, offering a sense of assurance that they will be taken care of, even in your absence.
Members are encouraged to do their nomination to facilitate a smoother and faster transfer of EPF savings to the nominee in the unfortunate event of the member’s demise. Considering that grieving the loss of a loved one is already a tough experience in the world, it’s best to not make the situation tougher by not making a nomination as the next-of-kin will have to go through a lengthy and tedious process to claim your EPF savings.
Click for the required documents and the processes to make or update your nomination
Understanding differences for Muslim and non-Muslim members
In the realm of EPF nomination, it's crucial to recognise distinctions based on religious affiliations. This understanding ensures a tailored approach that aligns with the diverse needs and legal frameworks governing Muslim and non-Muslim members. Let's delve into the specifics for individuals of different faiths, highlighting the distinct features that make this process inclusive and essential for everyone.
Muslim Members
In the case of Muslim members, the nominee is known as a Wasi (Administrator). Their role is to distribute the EPF member's savings according to Islamic Law among the rightful beneficiaries upon the member's demise. Alternatively, Muslim members can opt to nominate Amanah Raya Berhad (ARB) as the Administrator for the entirety (100%) of the savings.
Read also: Make Simpanan Shariah Your Choice of Retirement Planning
Non-Muslims Members
For non-Muslim members, the nominee(s) are the direct rightful beneficiaries who will receive the savings upon the member's passing. Like Muslim members, non-Muslims can also nominate ARB as the Administrator for the entirety (100%) of the savings. If the nominee is below 18 years old, ARB will serve as a trustee.
EPF’s additional support with Death Assistance
Now, here's something worth knowing – the EPF may at their discretion extend an additional hand to your next-of-kin when it’s needed most. In a thoughtful gesture, a one-time payment of RM2,500 will be considered for any of the deceased member’s eligible dependents as part of the Death Assistance, subject to the following conditions:
The deceased member was a Malaysian citizen.
Deceased members were below the age of 60 at the time of their demise.
Deceased members still have savings in the EPF.
Application for Death Withdrawal is made within 6 months of the date of demise.
Your EPF savings serve as assurance for your loved ones in times of need, including funeral arrangements, underscoring the comprehensive support provided by your EPF contributions during challenging times.