Malaysians who are seeking to expand their nest egg beyond the Employees Provident Fund (EPF), can start contributing to the much-anticipated Private Retirement Scheme (PRS) from September.
Prime Minister Datuk Seri Najib Abdul Razak today launched the final component of the PRS framework with the establishment of the Private Pension Administrator (PPA) – the body tasked with running the entire private retirement plan.
He also named Zaiton Mohd Hassan, who is currently the managing director of Capital Intelligence Advisors Sdn Bhd, as chairman of the body.
Other members of the board are Datuk Nozirah Bahari, Datuk Dr Thillainathan Ramasamy, Ou Shian Waei and Ahmad Zakie Ahmad Shariff.
The PPA, regulated by the Securities Commission, will keep records of all transactions or monies received. It will also handle the administration and customer service.
The PRS is a voluntary retirement savings scheme structured by private sector fund providers which are licensed and approved by the SC.
The first set of schemes comprising 24 funds by eight PRS providers will be available to the public from September.
Najib said the PRS offers opportunities to the people as it can provide an environment for individuals to build up retirement funds for career mobility, while for employers, PRS may be utilised as a tool for retaining and attracting talent.
The scheme is open to all Malaysians and foreigners above 18 years old, as well as employers contributing on behalf of employees.
“I would urge employers to consider using the PRS to offer a more attractive remuneration package in the form of higher contributions to their workers’ retirement benefits, whilst giving their workers freedom to decide on the type of scheme they wish to participate in,” Najib said at the launch at the SC headquarters today.
The eight initial intermediaries approved by the SC to offer funds under the scheme are AmInvestment Management Sdn Bhd, American International Assurance Bhd, CIMB-Principal Asset Management Bhd, Hwang Investment Management Bhd, ING Funds Bhd, Manulife Unit Trust Bhd, Public Mutual Bhd and RHB Investment Management Sdn Bhd.
“The development of the private pension industry has the potential to change the face of the retirement landscape in Malaysia by increasing and supplementing coverage on a voluntary basis to all sectors of the labour market, including the self-employed, and enabling Malaysians to secure an additional and adequate nest egg when they retire,” said Najib.
The target audience for this scheme also includes employers who want to increase their contributions to their employees as part of plans to attract and retain skilled talent, besides the mandatory 12% of the basic salary to EPF.
Each PRS provider will offer a range of retirement funds from which individuals may choose to invest in, based on their own retirement needs, goals and risk appetite.
Every scheme has three default funds: growth, moderate and conservative; and up to four other funds.
As with all investments, the returns from contributions made to PRS are not guaranteed and will depend on the performance of the PRS funds.
Measures to incentivise participation in the PRS announced by Najib in the 2012 Budget speech include:-
>> personal tax relief of up to RM3,000 for contributions by individuals to PRS approved by the SC;
>> tax deductions to employers for contributions above the statutory rate up to 19% of employees’ remuneration.
>> tax exemption on income received by funds within the scheme; and
>> proposed tax deduction on employers’ contributions to the scheme for their employees.
The Sundaily
Above age 18 but any age limit?
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