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CPF Nomination (English)

Fatwa on CPF Nomination.

Last updated 21 February 2025

ADMINISTRATION OF MUSLIM LAW ACT

(CHAPTER 3, SECTION 32)

FATWA ISSUED BY FATWA COMMITTEE, ISLAMIC RELIGIOUS COUNCIL OF SINGAPORE

The Fatwa Committee 2007-2010 has reviewed the fatwa on CPF Nomination in its 24th meeting of 3 August 2010.

Fatwa

بسم الله الرحمن الرحيم

الحمد لله رب العالمين ، والصلاة والسلام على سيد المرسلين وإمام المتقين نبينا محمد وعلى آله وأصحابه أجمعين.

اللهم أرنا الحق حقا وارزقنا اتباعه، وأرنا الباطل باطلا وارزقنا اجتنابه . وبعد

1. The Islamic Syariah has determined that all property owned by an individual form part of his/her tarikah (estate). Tarikah is subject to several religious obligations such as the payment of the deceased’s outstanding debts (ie. Zakat or hajj debts) and/or disbursement of the deceased’s will, before the remaining estate is distributed according to faraidh.

2. Regarding CPF monies owned by the CPF contributor, the Fatwa Committee has decided in 1971 that it is considered as part of the contributor’s estate, to be distributed according to faraidh. The Fatwa also discussed the status of a CPF nominee. It held that a nominee is only a trustee and is responsible for the distribution of the estate to the heirs according to the faraidh rules.

3. Based on feedback received from the community, wherein many Muslim families face difficulties as the previous Fatwa view then did not recognise all nomination made in favour of dependants and immediate family members who are in more need of the money.

4. At the same time, there have been many changes in the administration of CPF monies since 1971, especially in terms of the disbursement of the CPF monies to the contributor during his/her lifetime. Among the latest and significant change which has implications on the ruling regarding CPF monies is the gradual decrease of the withdrawal amount which will be received by a CPF contributor/member upon reaching the draw down age. Instead, contributors will receive a monthly sum of money which in most probability is only sufficient for their personal needs.

5. Based on the findings above, the Fatwa Committee hence deduces the following:

  • Every fatwa issued to the general public should not limit the available options. A fatwa must take into consideration the different circumstances and conditions faced by each individual. Hence a fatwa must provide options for the public to determine their individual needs and welfare (maslahah).

  • The Fatwa Committee maintains that CPF monies form part of one’s tarikah (estate). Accordingly, for those who did not make a nomination, it is to be distributed according to faraidh.

  • From the religious perspective, the nomination system is a contemporary form of financial planning instrument not found in the works and writings of the classical scholars. However, there are several similarities between the nomination system and hibah.1

  • A comparison between nomination system and hibah leads to the following findings:

Table 1: Comparison findings between nomination system and hibah

CPF Nomination

Hibah

Nomination is limited only to personal CPF savings

Hibah is only valid with one's personal property

CPF monies remains under the ownership of the account holder"&" so long as it has not been disbursed to the nominee.

"Money which is intended as hibah(gift) remains under the ownership of the giver until the giftee receives it (" qabadh "takes place)"2

"CPF contributor reserves the right to revoke his/her nomination provided there has been no pay-out ("qabadh") of his/her nomination ."

"An individual who makes a hibah reserves the right to revoke/change his/her"hibah", provided there has been no disbursement ("qabah") of his/her gift."

"CPF contributor may name his/her"faraidh" beneficiary as nominee"

Hibah " maybe made to " faraidh " beneficiaries"

There is no limit to nomination

"There is no limit to" hibah

Nominee will only receive CPF monies after the demise of the account holder.

Hibah may be received (execution of qabadh) after the demise of the giver subject to certain conditions

6. The Fatwa Committee finds that hibah and the CPF nomination system differs in the following two aspects:

Table 2: Difference between the CPF nomination system and hibah

CPF Nomination

Hibah

Nomination can be made for CPF monies which are yet to be owned by the contributor.

An individual may only make hibah of property which is already under his/her ownership.

CPF nomination system has made it a condition that disbursement (qabadh) may only take place after demise of contributor without the need for the consent of heirs.

Some scholars have made it a condition that when no disbursement of a hibah (qabadh) takes place prior to the demise of the giver, the hibah may only be executed with the consent of the heirs of the giver.

7. The Fatwa Committee is of the opinion that the condition in hibah which requires the property intended as a gift to be under the ownership of the giver at the time the gift was made, is intended to avoid any ambiguity which may lead to deceit (gharar) or abuse (zhulm) of the recipient. Whereas in regard to CPF savings, in spite of the gradual increase in the contributor’s savings, elements of deceit or abuse does not exist as the contributor’s intention and purpose was already made clear. This is in addition to the protection of the CPF monies as provided by the CPF Act.

8. The Fatwa Committee is also of the opinion that the CPF nomination system may be considered as hibah as it is made by the contributor during his lifetime. However, qabadh has not taken place due to the restrictions imposed by the CPF Act. This differs from the classical hibah which requires the consent of the heirs if the giver passes away before the execution of the qabadh. Therefore, when a contributor makes a formal nomination, it is proof of his/her intention and promise to give his/her money to the nominee.

Allah s.w.t. mentions in the Quran:

[ يَا أَيُّهَا الَّذِينَ آمَنُوا أَوْفُوا بِالْعُقُودِ ]

Which means: O you who believe! fulfil the compacts (contracts) [Al-Maidah : 1] And:

[وَأَوْفُوا بِالْعَهْدِ إِنَّ الْعَهْدَ كَانَ مَسْؤُولاً]

Which means: And fulfil the covenant; verily the covenant shall be asked about [Al-Israa': 34]

9. The original legal status of transactions is “permissible”, based on the following legal maxim

الأَصْلُ فِي الْعُقُودِ وَالشُّرُوطِ الصِّحَّةُ إلاَّ مَا أَبْطَلَهُ الشَّارِعُ أَوْ نَهَى عَنْه

The original [legal status of] contracts and conditions is permissible except what is nullified or prohibited by the Legislator3

Thus, the main principle in Islam on matters relating to financial transactions (muamalat) is to recognise needs (maslahah) and avoid harm (mafsadah).

10. Based on the reasons above, the Fatwa Committee decrees that :

i. Each CPF contributor is responsible to evaluate the option which is most suited and fulfills the needs and protects the welfare of his/her family in the administration of his/her CPF savings. S/he may choose to either utilise the nomination instrument, or distribute according to faraidh, or exercise both options together. This evaluation and assessment must take into consideration the financial condition of his/her beneficiaries and who is in more need of the money.

ii. The nomination system is a contemporary form of property distribution not found in the writings and scholarly works of the scholars of the past. However it is permitted as it is considered as a new form of hibah. It is also able to preserve the spirit of faraidh – in ensuring the welfare of one’s dependants. This is particularly in light of the amendments to the CPF Act, where contributors will no longer receive a substantive amount which would enable him/her to spend on his/her dependants . At the same time, CPF contributors must be aware that a nomination cannot be made with the intention and purpose of unfairly denying the rights of the other beneficiaries.

11. The recipient of CPF monies - whether by way of faraidh distribution or nomination - is obliged to ensure that all of the deceased debts are settled before using the money for personal use.

الله أعلم ، وبالله التوفيق ، وصلى الله على سيدنا محمد وعلى آله وصحبه وسلم.


SYED ISA MOHD B SEMAIT

MUFTI OF SINGAPORE

CHAIRMAN, FATWA COMMITTEE

ISLAMIC RELIGIOUS COUNCIL OF SINGAPORE

[1] Hibah: A form of gift intervivos (during lifetime) without expecting any return or exchange.

[2] Qabadh: An undisputed transfer of the gift from the giver to the giftee

[3] Ibn Qayim al-Jauziyy, I’laam al-Muqi’in, 1:470; al-Syaatibiyy, al-Muwaafaqaat, 305.