Private Retirement Scheme (PRS)
The introduction of PRS aims to provide an additional pillar to support the retirement needs of Malaysians. A PRS is a voluntary scheme designed to help individuals accumulate savings for retirement.
It is an additional way to boost total retirement savings, whether you are an Employees Provident Fund (“EPF”) member or not. If you are an EPF member, the PRS can complement your EPF savings. It also helps the self-employed to build up their savings, and encourages employers to provide extra benefits for their workers beyond their mandatory contribution.
Each PRS will include a range of retirement funds that individuals may choose to invest in based on their own retirement needs, goals and risk appetite. Such funds are managed in a way that is consistent with the objective of building savings for retirement with a prudent spread of risk.
Benefits of contributing to the PRS
Diversification
Investors’ contributions will be pooled for the purchase of a diversified portfolio of stocks, fixed income securities as well as other permissible assets which yields returns at lower risks compared with investing directly in any individual investment such as stocks.
Professional management
The funds are managed by professional fund managers with the expertise and resources to manage the assets of the funds.
Ease of transactions
The funds do not require cumbersome administrative paperwork or record keeping on investors’ part in managing a range of investments.
Enjoy additional tax savings
Individuals (both self-employed and employees) can enjoy up to RM3000 per year personal tax relief on top of the RM6000 per year tax relief for the mandatory retirement savings contribution and life insurance premiums. This could be as much as RM780 per year (depending on your tax bracket).
Additionally, employers are also allowed to claim a tax deduction on contributions to PRS made on behalf of their employees up to 19% of employees’ remuneration.
Income of the fund is exempt from Malaysian income tax
Since income of the fund is exempt from Malaysian income tax, the income distributed from the funds to you should be exempted from Malaysian income tax as well.
Bonus: If you are between 20-30, you can enjoy RM1000 youth incentive by opening an account with us.
(until December 2018 only)
How does PRS work?
All contributions made to PRS will be split and maintained in sub-accounts A and B as follows:
70% of all the contributions made to any fund within the scheme to be held in sub-account A and cannot be withdrawn until the retirement age. 30% of all the contributions made to any fund within the scheme to be held in sub-account B and can be withdrawn once a year upon payment of 8% tax penalty. The value of sub-account A and B can increase or decrease according to the unit price.
Type of funds
Growth Fund (Below age 40)
- Maximum of 70% equities
- Investment outside Malaysia permitted
Moderate Fund (Age 40-50)
- Maximum of 60% equities
- Investment outside Malaysia permitted
Conservative Fund (Above age 50)
- 80% in fixed income instruments of which 20% must be in Money Market and a maximum of 20% in equities
- Investment outside Malaysia not permitted
Our PartnerMore than 40 retirement scheme from 7 PRS Providers
Frequently Asked Questions (FAQs)
PRS is a voluntary long-term investment scheme designed to help individuals accumulate savings for retirement. PRS seek to enhance choices available for all Malaysians, whether employed or self-employed, to voluntarily supplement their retirement savings under a well-structured and regulated environment.
The PRS is designed to complement the Employees Provident Fund (EPF) and is regulated by Securities Commission Malaysia (SC).
Any individual who has attained the age of 18 years as of the date of the account opening of a private pension account may make a contribution to any fund under the PRS. The PRS is offered to both Malaysians and non-Malaysians.
You can make regular contributions or lump sum contributions to PRS. Please note that there may be differences in the minimum initial contribution amount and subsequent contribution amount and this may differ amongst the PRS Providers.
You may open your PRS account through us; we are one of the PRS Distributors.
- Annual RM3,000 personal tax relief for Year of Assessment 2012 to 2021
- One-time Government incentive of RM1,000 for Malaysians age between 20 – 30 with minimum first time contribution of RM1,000 to a single PRS fund within year 2017 to 2018
- Inclusion of PRS as allowable deduction (up to 19%) in a Company’s tax computation
Upon opening a PRS account with a Provider, you are automatically enrolled as a lifetime member of PPA. PPA members are given an online account, which features a single consolidated view, to enable members to view their investment details, check transactions and have access to performance reporting 24 hours a day.
