Original Question: If someone is covered under the dependants protection scheme of the central provident fund…in the case of the person’s death a payout is paid to the waris…is the payout permissible?

Answer:

In short, yes. The payout under the CPF Dependants’ Protection Scheme (DPS) is permissible, following the Singapore Fatwa Committee (MUIS). The DPS is a term life insurance scheme intended to provide financial support to a members’ dependants in the event of death, terminal illness, or permanent disability before age 65. 

The key Shariah ruling depends on whether the policyholder made a nomination: 

• If a valid DPS nomination was made, the payout belongs absolutely to the nominated beneficiary. It does not form part of the deceased’s estate and is not subject to faraid distribution. 
• If no nomination was made, the DPS payout forms part of the deceased’s estate and must be distributed according to faraid after settling any outstanding obligations of the estate.

This ruling was revised by MUIS in 2023, which recognised the DPS nomination as a valid form of tabarru’ (gratuitous transfer/gift). The committee also emphasised that Muslims should exercise care when making DPS nominations to avoid injustice and to consider the welfare of their dependents. 

This is supported by the Hadith : 

إِنَّكَ أَنْ تَدَعَ وَرَثَتَكَ أَغْنِيَاءَ خَيْرٌ مِنْ أَنْ تَدَعَهُمْ عَالَةً يَتَكَفَّفُونَ النَّاسَ فِي أَيْدِيهِمْ 

“ It is better for you to leave your inheritors wealthy than to leave them poor begging others “ (Sahih al-Bukhari, 2742)

Thus, IFSG is of the view that Muslims in Singapore may receive and benefit from DPS payouts in accordance with the latest MUIS fatwa. Those making DPS nominations are encouraged to review their nominations periodically to ensure they reflect their intentions and evolving family circumstances. 

Please refer to the official MUIS fatwa here, for the detailed explanation and its legal reasoning.