EPF Division in Divorce: Key Malaysian Case Law

Can EPF savings be divided?

Yes, if the court treats them as matrimonial property under Section 76 of the Law Reform (Marriage and Divorce) Act 1976. Matrimonial property means assets gained during the marriage.

EPF contributions from salary earned during the marriage are usually part of it. Contributions made before the marriage may be treated differently.

The Lim Kuen Kuen case

Lim Kuen Kuen v Hiew Kim Fook [1994] 2 MLJ 693, a High Court decision, is often cited on EPF and divorce. The wife asked the court to stop her husband disposing of his EPF and gratuity money before her claim was heard.

The court held that EPF savings and gratuity built up during the marriage by one spouse’s effort are matrimonial assets. It granted the injunction to keep the money in place until the claim was decided.

So a working spouse cannot simply say EPF is personal and off-limits.

How Section 76 applies

Section 76 separates two kinds of assets:

• Assets acquired during the marriage. The court looks at what each of you put in, in money, property or work, any debts taken on for your joint benefit and the children’s needs. It then leans towards an equal split.
• Assets mainly paid for by one spouse. The court looks at the other spouse’s contribution in looking after the home and family, and the children’s needs. The court weighs all of these.

EPF from one spouse’s salary is often treated as the second kind. In practice, the court also looks at how long you were married, the EPF balance, and how much was added during the marriage.

There is no automatic 50:50 split. Each case turns on its own facts.

Where the EPF Act 1991 fits in

The EPF Act 1991 runs EPF accounts. Section 51 of that Act stops EPF savings from being assigned or seized to pay debts.

Since 1 July 2008, Part VA of the EPF Act (sections 53A and 53B) makes an exception for divorce. When EPF is served a sealed court order dividing EPF savings as a matrimonial asset, it moves that amount from one spouse’s EPF account into the other spouse’s EPF account. The money is not paid out in cash.

The receiving spouse can usually only withdraw it at age 55, on incapacity, on leaving Malaysia for good, or (for their estate) on death. EPF can only move what is in the account on the day of transfer.

The power to divide EPF still comes from Section 76 of the Law Reform (Marriage and Divorce) Act 1976. The court may also offset the EPF share against other assets instead.

How the share is worked out

The court usually compares the EPF balance at the date of marriage with the balance when the divorce is filed. The difference is what was built up during the marriage.

Employer contributions and voluntary top-ups made during the marriage usually count. Balances from before the marriage and money from an inheritance are usually left out.

The court then applies the Section 76 factors. A homemaker who contributed a lot to the family can get a share of the EPF built up during the marriage, even where the EPF came from the other spouse’s work alone.

Practical steps

• Get your EPF statements early, showing the balance at the date of marriage and now.
• If you need your spouse’s EPF details, your lawyer can ask the court to order them to disclose it.
• Record your contributions, in money or otherwise. If you were a homemaker, gather proof of running the home, caring for the children and supporting your spouse’s career.
• Get advice from a lawyer who handles matrimonial property, as the EPF Act and Section 76 interact in tricky ways.

Looking to engage a divorce lawyer? If you are unsure how much of your EPF, or your spouse’s, could be shared, request independent lawyer contact via WhatsApp: Request Lawyer Contact. For general information, use our guides and tools.