The objectives of the Employees’ Provident Fund are very noble; primary among them is to enable contributors to save for their retirement years. EPF members are required by law to contribute a certain percentage from their salaries while their employers will also contribute a share to the members’ savings.
There’s even a provision for members to name their nominees in case they were to die before retirement.
However, a recent revelation from the EPF deputy chief executive officer Rusma Ibrahim is that more than 62 per cent of contributors have not named their nominees. This is very significant because more than 7.1 million members (out of about 11.4 million) make up this percentage.
What could be the reasons for the general apathy towards naming one or more family members as their nominees? Rusma pointed to two main reasons:
- Some of them think they are going to live beyond the retirement age of 55 when they can withdraw their EPF savings themselves;
- Others are just plain lazy, putting off their nomination day after day, which puts their families at risk in the event of their deaths.
Perhaps I should add one more excuse: claiming ignorance despite all the publicity by the EPF in the newspapers. It’s true. In this modern age, I’ve met people who claimed to be ignorant that they could nominate people to receive their EPF money should they die.
In the EPF records, there are more than 46,000 members with more than RM120 million accumulated who have died without naming their nominees or have not withdrawn their savings after reaching 55.
This financial irresponsibility extends to people who have not changed their nominations since the day they become an EPF contributor. Many of them, said Rusma, still named their ex-lovers, friends and parents as nominees. Problems will then arise when family members, mostly the wives of the deceased contributors, try to claim the savings from the EPF. This is a situation where the EPF cannot do anything for them as there are no laws to empower the EPF.
By the way, the regulations are very clear on what happens when an EPF nomination fails. For example, a nominated parent had passed away before the member himself died. EPF says they will pay an initial RM2,500 from this nominated share to the next-of-kin while waiting for documentary evidence. A second payment of up to RM17,500 will be made within two months. But the next-of-kin can only get the remainder on producing a letter of administration, grant of probate or distribution order or, in the case of Muslims, a faraid certificate. All very susah (difficult) when an EPF member chooses to be indifferent about his financial affairs while still alive.