Clarifying Your EPF Beneficiary Status
Have YOU Nominate Your beneficiaries?
For more information on Forget to Nominate Your Beneficiaries in EPF @ KWSP
Please take note that the nomination will be automatically VOID if any of the nominee person deceased
Clarifying Your EPF Beneficiary Status
Reuben Puan wrote to Soo Ewe Jin of Star Biz on some EPF matters on beneficiaries.
Soo forwarded the mail to EPF and got the official reply from EPF.
The subject matter is important, do read the content and see if your beneficiary for your EPF and prevalent issues need your further attention:
Dear Reuben,
Thank you for your query which has been referred directly to me by Mr. Soo Ewe Jin.
Please find our responses below:
1. What precedes the EPF……the Will or the EPF nomination?
The EPF nomination will always supercede the Will.
2. Suppose I nominate 25% each for my son and daughter and the remainder 50% for my spouse, if an accident were to befall both of us, then what happen? Will my children be getting 50% each automatically?
Should an EPF member dies at the same time as his or her nominee, the nomination portion that was bequeathed to that nominee will be invalid.
Therefore if an accident were to befall both you and your spouse, 50 percent cent of your EPF savings or the nomination portion which has been bequeathed to your spouse will be invalid.
This 50 per cent will be subjected to procedures under ‘EPF savings without nomination’ in which the first priority for the right to claim the member’s savings goes to the appointed administrator of the deceased member’s estate.
This therefore means that 50 per cent of your EPF’s savings will not be paid automatically to your children.
3. Furthermore, if fate would have it that the 4 of us suddenly meet our maker, then what is the outcome?
The same principle applies as above i.e. the nominations will be invalid.
In such a case, withdrawal of EPF savings will be subjected to procedures under EPF savings without nomination’ in which the first priority for the right to claim the member’s savings goes to the appointed administrator of the deceased member’s estate.
I hope the above answers have helped to shed some light to your queries. If you have any other queries, please email me.
Thanks and best regards,
Nik Affendi Jaafar
General Manager,
Public Relations, EPF
Wah… useful info.. thanks for the sharing Alan.. so, to be on safe side, better put more names as benefitiaries :p
A higher EPF dividend expected
PUTRAJAYA: The Employees Provident Fund (EPF) dividend for 2009 is expected to be higher compared to the 4.5% paid out in the previous year.
EPF chairman Tan Sri Samsudin Osman said this was due to the local share market’s stable position and good investment returns.
“A meeting on dividend rates will be held this month, while an announcement will be made in March,” he told reporters here yesterday.
Samsudin, who is also Putrajaya Corporation president, had earlier presented prizes to winners of a fishing competition held in conjunction with Federal Territory Day celebrations.
In December, EPF announced that it obtained RM5.5bil in profits in the third quarter of last year, an increase of RM696.32mil compared to RM4.8bil in the previous quarter.
EPF chief executive officer Tan Sri Azlan Zainol said EPF funds had now increased to RM361.09bil compared with RM353.93bil in the second quarter of last year.
For the year 2008, 12 million EPF members received a dividend of 4.5%, which was lower than the 5.8% for 2007.
fr:thestar.com.my/news/story.asp?file=/2010/2/8/nation/5634207&sec=nation
EPF’s 2009 payout will be better
But don’t hope for an ang pow
THANKS largely to a stellar stock market performance in 2009, the Employees Provident Fund (EPF) should be declaring a decent dividend for last year soon. And thanks too to low interest rates, the pension fund’s dividend payments is going to look good, when measured against the fixed deposit rates.
It is likely that the difference between what the EPF declares and prevailing FD rates will be more than 2 percentage points, which will leave many contributors comfortable with the thought that their EPF savings are giving them higher returns than what their cash in the bank is earning.
Recently, EPF chairman Tan Sri Samsudin Osman hinted that the dividends to be announced next month would be better than the 4.5% announced for the year before. He said this was due to “the local share market’s stable position and good investment returns.”
The EPF must be enjoying some decent (albeit paper) gains because of last year’s stellar performance of the stock market. And that, in turn, means it will likely report higher net earnings for 2009 compared with 2008.
To recap, the EPF had to provide a net allowance of the diminution in the value of its investments of a whopping RM3.9bil for 2008. This was possibly the highest provisioning that the EPF has had to do for its investments and most of this is believed to be related to the 2008 global stock market crash.
To be noted is that this was a mere provision, which means that the EPF did not actually “lose” that amount of money but because of prudent accounting principles, it had to “mark to market” the value of its investments.
Logic will dictate that considering stock markets had rebounded in 2009, that the reverse will happen i.e. the EPF will have the opportunity for some hefty writebacks of the market value of its investments.
This in turn will mean a better net income figure and that in turn will mean higher dividends. The EPF has historically given out just about all of its net income through dividends to its contributors.
But beyond the writebacks, there’s not much more to be expected from the EPF in terms of its earnings growth. Indeed, analysts reckon that it would be very difficult for the pension fund to sustain payouts above 5% in the coming years. That’s because of the following facts:
·While weak equity markets will continue to hurt EPF over the near term, over the longer term, the fund’s performance will also be determined by the returns it gets from investing in low-risk assets such as government bonds.
·The EPF had allocated a quarter of its more than RM360bil investment funds for higher yielding government papers. But as these higher yielding notes expire, the fund must purchase new issues which will now come with lower returns.
·Another big chunk of EPF holdings is in highly-rated corporate bonds and low-risk guaranteed loans.
However, the global economic turmoil has cut the supply of new bonds coming into the market.
Cheaper lending rates had also reduced interest income from loans given out.
It is worth noting that under the law, EPF has to maintain a dividend rate of at least 2.5% annually. The dividend must come from income generated from its investments.
Note: The assumed FD rate is the 12 month average FD rate in Malaysia.
l Deputy news editor Risen Jayaseelan reckons that while many contributors would still feel that their EPF dividends should be higher than what they are, we should be reminded that the EPF’s foremost principle is capital preservation and with that comes lower returns due to its lower risk investments.
fr:biz.thestar.com.my/news/story.asp?file=/2010/2/10/business/5647768&sec=business
EPF declares 5.65 percent dividend rate for 2009
KUALA LUMPUR: The Employees Provident Fund (EPF) has declared a dividend rate of 5.65 percent for the financial year ended Dec 31, 2009, up from the 4.5 percent paid out for 2008.
The dividend rate was declared on the back of the highest-ever net income achieved of RM19.63bil, increasing 34.82 percent from RM14.56bil recorded in the previous year.
“2009 was a significant year for the EPF as it rode out the impact of the global financial crisis.
“While the EPF continues to be challenged by the fragile economic environment, our investment nonetheless delivered a sound performance for the year,” chairman Tan Sri Samsudin Osman said in a statement Friday.
During the year under review, 72.53 percent of the total investment was devoted to fixed income instruments, in line with EPF’s prudent approach, while 27.05 percent was in equities and the remainder in property.
As at Dec 31, 2009, EPF’s investment portfolio grew 8.55 percent or RM29.25bil to RM371.26bil from RM342.01bil in 2008.
On prospects for 2010, Samsudin said: “Barring unforeseen circumstances, prospects for 2010 are greatly dependent on the economic performance of the country and internationally.”
He said globally, financial markets continued to be volatile and this might have an impact on the price performance of EPF’s investments and future income.
“We will continue to focus on our key goals of preserving the capital of our contributors and ensuring a satisfactory real rate of return,” he added.
fr:thestar.com.my/news/story.asp?file=/2010/3/5/nation/20100305200325&sec=nation
Socso should merge with EPF
I REFER to the news that Socso will be giving recipients some cheers by way of increasing its payout.
While that is good news indeed, it really doesn’t explain why Socso has so much in reserves and what it plans to do with that.
Socso’s website shows that as of Dec 31, 2006, it had assets worth RM14bil. Yes, that’s correct. And I am sure that in 2009 this figure was much higher.
It must be remembered that the money in Socso is the contributors’ money. Therefore the excess should be refunded to us contributors and the monthly payment should be reduced as Socso is collecting just too much compared with what it needs.
As our monthly contributions are merely workmen’s insurance, surely the surplus should be refunded to us. iEven better, I propose Socso merges with EPF and the monthly contribution be combined with an insurance element. In this way, any surplus will always be returned to depositors in the form of dividends.
VRK,
Kuala Lumpur.
fr:thestar.com.my/news/story.asp?file=/2010/3/8/focus/5805540&sec=focus
Are EPF savings alone enough?
Invest ahead to generate extra money after retirement.
WHEN I was growing up, I aspired to join the Government. The main reason so was that I could be eligible for a pension scheme. This came from the fact that my parents were both civil servants and they got to enjoy the benefits of a pension when they retired. They still do.
While it’s not much, it’s comforting for them that at their age, they would continue to have an income for as long as they lived. I wanted to be able to look forward to that as well.
Alas, fate – or was it free will? – had a hand to play in my career choice and I ended up taking a job in the private sector. Seeing as I’m having fun doing what I do, I don’t see myself switching careers any time soon. So there goes my plan of getting a pension.
Time to switch to Plan B, namely, the Employees Provident Fund (EPF). It is intended to help employees from both private and non-pensionable public sectors save a fraction of their salaries in a contribution scheme. The contributions are invested to generate income and the funds in the contributors’ accounts are to be used in the event that the employee is temporarily or no longer fit to work.
It primarily applies to retirement, but sickness, disabilities or unemployment are also covered. The EPF also provides a framework for employers to meet their obligations to employees.
As a retirement plan, money accumulated in EPF savings can only be withdrawn when members turn 50, during which they may withdraw only 30% of their balance. Members who are 55 or older may withdraw the entire sum.
Recently, the EPF board declared a dividend of 5.65% for the financial year ended Dec 31, 2009, up 115 basis points over the 4.5% paid for 2008.
According to Fundsupermart.com Malaysia, over the past five years, EPF has been distributing an average annual dividend of 5%. The average real dividend rate for the past five years was 1.7%, after reflecting an average inflation rate of 3.4%.
With that, the important question to ask is: Will the savings from our EPF be enough to sustain us in our retirement years?
Expert advice
In his Personal Investing column, “Enough money for retirement?” last year, MRR Consulting investment adviser and managing partner Ooi Kok Hwa says as the average Malaysian lived to about 75, those who retire at 55 would need to manage their EPF savings for 20 years. But most retirees spend all their EPF money within three years of retirement, he claims.
Ooi provides a breakdown of how a retiree can manage his EPF savings for 20 years.
“We will assume a starting pay of RM1,500, growing at the rate of 8% per annum; an average bonus of two months per annum, average EPF returns of 5%, total EPF contribution of 23% (employer: 12%, employee: 11%) and inflation rate of 3%.
“Our analysis shows that if we are able to live with just one-third (or 33%) of our last drawn salary, the EPF money should be able to support us for 20 years until we pass away at 75.”
According to Ooi, if a person’s last drawn salary is RM13,976 at 55, he can only afford to spend one-third or RM4,612 per month after retirement (1/3 x RM13,976).
He stresses, however, that the computation was based on the assumption that a person would still be able to generate 5% returns after retirement.
“Everyone has different financial situations. If possible, we need to build our own investment portfolio apart from the EPF savings. We may need to seek some part-time jobs after retirement if our financial resources do not permit us to stop working,” he wrote.
“Besides, we need to clear all our outstanding debts before retirement. We also need to buy enough life and medical insurance for ourselves as well as set up education funds for our children.”
Financial planner Wilson Low says a person who’s concerned about his or her future financial well-being has one clear option – invest.
“Anyone who’s worried about not having enough money in their old age should do something about it, to make sure that you do have money to sustain you when you’re old and not working any more,” he adds.
“The obvious thing to do is to invest in something that can help generate an income for you when you’re older. There are various investment avenues out there and with proper planning and research, financial independence is not an impossibility.”
What some have done
Rita (not her real name), is a retired nurse. After working for the Government for 30 years, she worked in the private sector for a further nine years because she needed the money.
However, she admits that without her pension, it would be difficult to make ends meet. “There are things like your children’s education or repairs to the house that you need to think about. Without the pension, the EPF definitely would not be enough.”
Rita adds that as a former civil servant, she will always be eligible for free treatment at government hospitals. “This is especially important since most medical expenses will come up as one gets older,” she says.
Rita adds that EPF also used to declare higher dividends, between 6% and 7% in the 1990s.
Kamala (not her real name) was a former employee of the Rubber Research Institute of Malaysia. A Government-based organisation initially, it was privatised in the 1990s and its employees were asked to chose either a pension or EPF scheme as a retirement option.
Kamala chose the EPF scheme, a decision she claims she regrets. “The money finished quickly as I had many financial obligations like my children’s education and housing loan. I also had to undergo an expensive operation, the cost of which would not have been an issue if I were a civil servant.”
She is however thankful that today, her children have all grown up and give her husband and her money on a monthly basis. “We have also invested our money in property. So financially we are all right.”
Meanwhile, Kong, an information technology executive in his early 40s, says he spends about RM4,000 a month on household expenses, his children’s education and an outstanding home and car loan, among other financial obligations.
“I’m spending so much every month that I hardly have enough to save. Fortunately my wife is also contributing. After 55, it’s definitely not going to be easy. I’ll probably have to continue working until my kids can support themselves,” he adds.
fr:biz.thestar.com.my/news/story.asp?file=/2010/3/13/business/5843667&sec=business