How to Convert from Conventional to Shariah Compliance EPF Through i-Account 2024

For those who contribute to KWSP savings, you may have heard about the options of Conventional Savings and Shariah Compliance EPF. Muslim members, in particular, have the choice to convert their Conventional Savings to Shariah Savings if they wish to do so. This option helps Muslim individuals to alleviate concerns about the halal status of the dividends received since the investments made are Shariah-compliant.

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Things You Need to Know Before Switching to Shariah Savings EPF

Muslim individuals are encouraged to switch to Shariah Savings as it promotes ethical investments. In other words, it avoids investments in sectors that generate and promote alcohol, gambling, adult entertainment, and so on.

If you have not yet switched to Shariah Savings in KWSP, this article will help you better understand Shariah-compliant savings, the differences between Shariah and Conventional Savings, and more.

1. What is Shariah Savings in KWSP?

Shariah Savings in the Employees Provident Fund (KWSP) is a choice of retirement fund that you should consider. Shariah Savings allows members to make savings based on Shariah principles and is managed and invested in accordance with Islamic principles.

A Shariah Advisory Committee (JKPS) is established to oversee all aspects of Shariah compliance in the operations, investments, and governance of Shariah Savings in KWSP. The JKPS is also responsible for certifying the Shariah compliance of any investment to be made by KWSP.

2. Why Should You Switch to Shariah Savings in KWSP?

As a Muslim, you are advised to switch to Shariah Savings to ensure that your savings are managed and invested according to Shariah principles. Additionally, Shariah Savings (for Muslim members) can:

Help you establish a retirement savings that is managed in accordance with Shariah principles for your own and your family’s benefit. Withdrawals from Account 2 for purposes such as Hajj and Umrah can be made without any concerns about the source of funds;
Ensure that your savings are not used for purposes that are contrary to Islamic law, particularly avoiding elements of riba (interest), maysir (gambling), and gharar (uncertainty) that are commonly found in conventional banking and insurance investments;
Assist you in providing halal savings funds to be distributed as inheritance to your beneficiaries in the event of your death.

Non-Muslim members can also choose to switch to Shariah Savings in KWSP as an alternative to the existing Conventional Savings, offering:

Same investment objectives and risk profiles;
Allocation of strategic assets in a similar manner;
Investments limited to ethical Shariah-compliant sectors only;
Minimal exposure to the financial sector compared to Conventional Savings.

3. How to Switch from Conventional KWSP Account to Shariah KWSP Savings Online

To facilitate the online switching of your Conventional Account to Shariah Savings, you need to register as an i-Account member first.

Log in to your i-Account (Member);
Then, select the Shariah KWSP Savings tab and click on Register;
Follow the guidelines and instructions for switching to Shariah KWSP Savings. You will need to verify your member information, enter the Shariah Savings agreement, and confirm the agreement by entering the TAC code sent to your registered phone number.

Please note that once the switch to Shariah Savings is effective, you cannot revert back to Conventional Savings. However, you can cancel your Shariah Savings registration before the effective date of the Shariah Savings Account. Further information regarding Shariah KWSP Savings can be found here.

4. Differences Between KWSP Shariah vs Conventional Savings

Here are the differences between Simpanan Konvensional (Conventional Savings) and Simpanan Shariah KWSP (Shariah-compliant Savings) that you need to know:

	Shariah-compliant Savings KWSP	Conventional Savings KWSP
Membership	All KWSP members, regardless of religion, ethnicity, and citizenship status, can choose to switch to Shariah-compliant Savings	All KWSP members are subject to Conventional Savings unless they choose to switch to Shariah-compliant Savings
Akad (Shariah Contract)	Subject to Shariah-compliant Savings Contract based on Wakalah agreement	Not applicable
Dividend Rate	Dividend rate is based on the actual performance of Shariah-compliant investments, with no minimum guaranteed dividend rate	Dividend rate is based on the actual performance of Conventional investments (both Shariah-compliant and non-compliant), subject to a minimum guaranteed dividend rate of 2.5 percent
Certification by Shariah Advisory Committee (JKPS)	Certified by the KWSP Shariah Advisory Committee and subject to the Shariah Governance Framework	Not applicable
Account Conversion	Members cannot choose to revert to Conventional Savings after the effective date	Members can choose to switch to Shariah-compliant Savings

5. Dividend Rate for Conventional Account vs Shariah-compliant Savings Account EPF

The dividend rates for both the conventional account and Shariah-compliant savings account in KWSP can be considered competitive. The declared dividend rates reflect the actual investment performance for both types of accounts.

Usually, the announced dividend rates for both accounts will show slight differences. To find out the latest dividend rates, members can check their KWSP dividend statements through various methods:

Visit the nearest KWSP branch in person;
Check KWSP dividends through KWSP kiosks;
Check KWSP dividends online via i-Akaun KWSP.

Checking KWSP Dividends for 2022 through the i-Akaun Portal

To check KWSP dividends online, you can follow these steps:

Visit the KWSP portal;
Enter your User ID and click Next;
The security image will be displayed – make sure the displayed image matches the secret phrase registered previously;
Enter your password and click Log In;
Information regarding your KWSP dividends will be displayed.

Please note that dividend rates may vary each year and it is recommended to check the official KWSP portal or contact KWSP directly for the most up-to-date information.

Shariah Compliance EPF: Perform Dividend Purification for KWSP if You Haven’t Switched to Shariah-compliant Savings

For KWSP members who are Muslims and have not switched or chosen to maintain their savings account under the Conventional Scheme, it is their responsibility to purify the dividends received each year. Muslim KWSP members who keep their savings in the Conventional Scheme are responsible for purifying the received dividends based on the predetermined percentage starting from 2017.

However, based on the decision of the Special Muzakarah of the National Fatwa Committee, dividends received before 2017 do not need to be purified. This is because KWSP had not established the option of Shariah-compliant Savings for its members at that time. You can refer to the KWSP website for further information.

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