Name EPF beneficiaries before it is too late

More than 50% of EPF members have yet to nominate their beneficiaries which could result in a lot of heartache for the family if the unforeseen occurs.

WHEN engineer Farid* died in an accident at the age of 31, it was a shock to everyone, especially his wife Ani*. She had given birth to their first child only a few months earlier and they had just bought a house. Suddenly, Ani found herself saddled with extra financial responsibilities. What kept panic at bay was the thought of her late husband's EPF (Employees Provident Fund) savings to help her cope with their bills and loans.

“So you can imagine my horror when the EPF told me that Farid had not nominated me, or anyone, as his beneficiary, which meant that I would have to put in some paperwork and wait a little while before I could have access to his account.”

Her husband had worked since he was 21, tells Ani, and he had quite a substantial amount in his account.

“I was already working then, so I could support myself and my son but when my husband and I calculated our budget for a house and the other expenses, we based it on our joint incomes. I needed help to cope financially, at least to trim down our debts' to a manageable amount. Being told that I not only would not get the money anytime soon, and may even need to hire a lawyer to get it was definitely the last thing I wanted to hear,” she recalls.

Luckily with the help of a “lawyer-friend”, she managed to get things processed within six months.

According to EPF public relations general manager Nik Affendi Jaafar, only around 40%, or 4.71 million of their 12.9 million EPF members have nominated their beneficiaries (as of June 2011).

This can cause a lot of heartache for the family or next of kin when the member dies.

Without a nomination, they would have to produce a Letter of Administration, Letter of Probate or Distribution Order from the relevant authorities to substantiate their claim on the savings, and this can be a hassle, says Nik Affendi.

“In comparison, completing a nomination takes only minutes all members have to do is to fill up the KWSP 4 Form and submit it to the nearest EPF branch.”

Nik Affendi: ‘We have set up an online search through the myEPF website, and have made sure that data in the online search is also updated’
With a nomination in place, there is no necessity to go through the inconvenience of having to produce these documents.

Although they have received various complaints that the claiming process is too time-consuming with some saying that proof of relationship should be enough for immediate family he stresses it is necessary to prevent fraudulent claims and to ensure that the retirement savings of a deceased member goes to the rightful party.

Hence, it is crucial to nominate one's beneficiary, he stresses.

Life is full of uncertainties, he adds, so members should nominate their beneficiaries as soon as they register as a member and reach the age of 18. When members nominate their beneficiary, they are given a notification slip, which they should keep safely or pass on to their next-of-kin.

There are cases where the family of the deceased does not even know that they have been nominated as beneficiary.

For Muslim members, he reminds that the nominee is supposed to act as an “administrator” (wasi) who will then be responsible for distributing the savings in accordance with the Faraid Law ((Islamic law of inheritance and distribution).

However, there have been various cases of abuse, so it is important that you nominate the right person as the wasi.

“Unfortunately, once the money is disbursed, it is out of the EPF's hands. It is not our jurisdiction to ensure that the money is properly distributed,” says Nik Affendi.

This is something that Norina* found out the hard way. When her ex-husband passed away recently, she was told by her former brother-in-law, who had been nominated as the beneficiary, that her late husband's EPF savings would be used to pay off all of the deceased's debts while the balance would be donated to the poor. Their three children would not receive anything.

In another case, a person had named his father as wasi, but when it came to the crunch, the wife of the deceased and children received nothing.

There have been calls for EPF to withhold the savings until all the next-of-kin can come forward, but as Nik Affendi explains, they are bound by the legalities of the nomination.

“If there is a nomination, there is nothing we can do. The money will be released to the beneficiary nominated.”

The good news is, the legality means that the family members can take the matter to the syariah court if the money is not distributed according to the Faraid Law.

As pointed out by Syarie Lawyers Association Malaysia (PGSM) president Zainul Rijal Abu Bakar, the beneficiary has to sign an Akujanji letter that he or she would divide the savings according to the Faraid Law when they receive the money, so failure to do so will make him or her accountable in court.

However, as inheritance battles go, this can be time-consuming.

Unclaimed monies

There are times when the family of the deceased do not even know that there is savings left behind, highlights Nik Affendi. Sometimes, the next-of-kin is not aware their parents had been working previously and have EPF savings.

Although nomination is confidential, the next-of-kin can check the existence of a savings as well as their nomination status by producing the deceased member's Death Certificate and proof of relationship (birth certificate or marriage certificate). The next-of-kin can go to the nearest EPF branch to check or conduct a search online to find out about unclaimed monies of their deceased's immediate family members.

However, he adds, for security purpose, the online search can only be done through members' EPF number or identification card number. Searches by name can only be made at the EPF branches.

According to Deputy Finance Minister Datuk Dr Awang Adek, as of Dec 31, 2010, there is around RM377.8mil of EPF savings that have not been claimed.

This unclaimed monies is said to belong to some 188,733 EPF contributors aged 75 and above, most with an average savings of about RM2,000.

After a stipulated time, the money will be transferred to the Registrar of Unclaimed Monies.

However, these monies are still with EPF, says Nik Affendi.

“While savings of members aged 80 and above would be transferred to the Registrar, none has been transferred yet.”

He says they have made various efforts and utilised all avenues possible to try and trace these members with unclaimed monies or their next-of-kin.

“For example, we have set up an online search through the myEPF website via www.kwsp.gov.my, and we made sure that whatever data in the online search is also updated.”

In the past, he says EPF had also published a directory of members with unclaimed contributions and placed copies of these at post offices, as well as state assemblyman and union offices. The directory received luke warm response from the public despite awareness campaigns and they were removed.

“It must be noted that we had also sought the help of the National Registration Department, the Election Commission and Telekom Malaysia to trace these members.

“There were even advertisements published in newspapers and television.”

Nik Affendi adds that attempts to contact and alert the members' next-of-kin (about the unclaimed contributions) were made based on latest information recorded in the system.

He adds there are other possible reasons for the unclaimed monies the first being that the individual had forgotten about his or her EPF savings. Secondly, there is lack of enthusiasm due to the fact that the amount is believed to be too small.

“What many forget is that the EPF continues to pay dividends to its members until the person reaches age 75, as long as the EPF monies have not been withdrawn. The dividend will still be paid even if the individual passes on before that age,” he notes.

By HARIATI AZIZAN and LIM CHIA YING