Decoding the division of EPF (KWSP) upon divorce in Malaysia

Not only signifying the separation of a relationship, a divorce also calls for the separation of assets and properties that have been jointly acquired during a marriage.

Whilst several aspects must be considered, a common one that is of newfound interest in recent years has been the division of an individual’s Employee Provident Fund (EPF).

Employees Provident Fund (EPF) also known as Kumpulan Wang Simpanan Pekerja (KWSP) in Bahasa Malaysia

1. Is EPF usually considered a matrimonial asset?

Although EPF has traditionally been considered a matrimonial asset in Malaysian courts, current judgements have shed light on the fact that there are certain stipulations which must be present in a marriage for a partner’s EPF to be deemed a matrimonial asset – and thus be subject to separation in the matrimonial pot.

More specifically, the High Court solidified that:

• An individual’s EPF must satisfy a nexus test by proving to be utilized for the enjoyment and use of the family during the marriage, and

• The EPF must have been used for a common purpose e.g. to fund family activities or being used for the benefit of the children.

It is also not explicitly stated in any piece of legislation that EPF contributions should be split as matrimonial property, and so the current standing is that the Court is empowered to determine whether or not an individual’s EPF should amount to a matrimonial asset in relation to case-specific facts.

Additionally, the Court has clarified that a decision to divide EPF funds post-divorce will be made subject to the decision of the EPF Board. As such, a transfer of EPF funds can never be wholly guaranteed.

2. What are some instances where EPF will be deemed a matrimonial asset?

The most common instance where EPF will be deemed a matrimonial asset is where one partner has made frequent contributions to their EPF during the marriage as a result of the other partner’s support at home. The Court is likely to agree to the division of EPF in this instance as the husband would have enough of an income to sustain himself. Section 53A of the Employees Provident Fund Act 1991 also reflects this need for a joint financial partnership between the parties in a marriage in order for the allocation of EPF to be made possible after a divorce.

In the recent case of Tan Shee Peng v Lee Bee Ai [2025] MLRHU 2322, the court held that the rationale behind dividing EPF savings is that, had the marriage continued into the parties’ golden years, both spouses would have enjoyed the accumulated retirement benefits together, especially given that the wife had stopped full-time employment after the birth of their first child to care for the children, the household, and the husband.

Opposingly, the Court has objected to the division of EPF where the EPF holder was already making maintenance payments and would require his EPF to sustain himself during retirement.

3. How do the Court's decide on the division of EPF (KWSP) and what are the factors that the Courts consider?

First and foremost, the Court will take into account that the fundamental objective of EPF which is to ensure parties have financial security during retirement.

Other factors the Court will consider include:

• Whose efforts the monies in the EPF were acquired by,

• The duration of the marriage,

• The financial and non-financial contributions made by both spouses during the marriage,

• The financial needs of each spouse,

• The future earning potential of each spouse,

• Whether the party seeking funds has their own EPF, and

• Child support.

In addition to these factors, it is important to note that EPF funds are personal to their holder, and so the Court intends to be fair in its distributive decision-making.

There is no legal obligation for the Court to divide EPF money, and equal distribution will also be unlikely where money has been accumulated solely by one party.

4. If so, what is the general percentage of division of EPF (KWSP) upon divorce in Malaysia?

Most commonly, EPF funds have been split in the form of 25%/75% or 30%/70% by the Courts, with the smaller ratios being allocated to those seeking an amount from their partners’ EPF.

In some instances, however, the EPF funds have been divided in half where the party has been assigned custody of the children and is in more financial need.

Ultimately, the court’s main aim is to award an amount that is fair and reasonable in the circumstances of each case which has to be evaluated on a case-by-case basis.

Should you have any queries regarding divorce and asset division, please do not hesitate to contact Piya Law Chambers via WhatsApp on +6012 5325660 or email info@piyalawchambers.com