Full tax relief mulled on emergency private retirement scheme withdrawals - SC

Malaysia is considering full tax exemptions on small amounts of withdrawal from private retirement scheme (PRS) funds for emergency purposes, said Securities Commission Malaysia (SC) chairman Awang Adek Hussin.

He said PRS play a crucial role in supplementing the public mandatory retirement scheme and in offering long-term savings flexibility.

However, there is a need to adapt the PRS framework to address long-term structural trends, including an ageing population, digitalisation and the changing nature of work, to better cater to the local retirement savings needs, he said in his keynote address at the Financial Planning Symposium 2024 organised by the Financial Planning Association of Malaysia.

Another measure being considered has to do with improving the process for members to transfer across funds and providers.

Awang Adek said the SC and Private Pension Administration Malaysia will work with PRS providers to develop a digital process for members to switch across funds more seamlessly.

“The PRS ecosystem benefits from a diverse pool of funds available to members. If a member’s chosen fund or default fund does not provide a commensurate return over a certain period, they can switch to a different fund or provider.

“Portability between different PRS providers is permitted once a year. This process should be as easy and seamless to increase PRS’s appeal and competitiveness of the industry,” he said.

He highlighted the crucial role played by financial planners in helping Malaysians plan for their retirement.

“Malaysia’s retirement security is a big concern, which has been exacerbated by the pandemic and Employees Provident Fund withdrawals that were allowed during that time,” he noted.

- Bernama