Most Malaysians do not have enough savings in their Employee Provident Fund (EPF) accounts for their retirement. Only a third have accumulated RM240,000 in their EPF – the minimum basic savings they should set aside by 55 years old. This amount will allow them to spend RM1,000 a month for 20 years.
To help Malaysians save for retirement, the government introduced a complementary Private Retirement Scheme (PRS), a savings and investment scheme in 2012. Members can make voluntary contributions and invest in funds approved by the government.
Read Also: Guide To EPF i-Saraan Contribution For Gig Economy Workers
Differences Between EPF and PRS
EPF and PRS are often compared to one another due to their similarities in helping Malaysians save for retirement. In fact, that’s where the difference start.
While employees must make mandatory EPF contributions of 11% of their monthly salaries, it also allows for voluntary contributions. On the other hand, PRS contributions are entirely voluntary and provides more flexibility in terms of frequency and amount of contribution.
In addition, both EPF and PRS offer tax deduction benefits to members who make voluntary contributions. Employees who voluntarily contribute to EPF get to enjoy an annual tax exemption while employees who invest in PRS can enjoy tax reliefs of up to RM3,000 a year.
If you’re an employee who wants to contribute to PRS, your employers can make contributions on your behalf even though they are not mandated to do so. Employers can also make matching contributions and they will enjoy tax reliefs when they do so. Plus, your spouse, parent or partner can also contribute to the PRS on your behalf through their account.
While the EPF is managed by the government and members don’t get to have a say in which assets they invest in, the PRS is managed personally, and investors get to choose which assets they want to invest in.
EPF offers a guaranteed dividend of at least 2.5% p.a. to investors, but PRS do not offer guaranteed profit. Returns from PRS is dependent on the performance of underlying investments.
How To Invest In PRS Funds?
Anyone who is aged 18 and above can invest in PRS funds. You may start by selecting a PRS provider and a suitable fund. Then, you can register for a PRS account.
If you’re a Malaysian residing in Malaysia, you can enrol online through the Private Pension Administrator Malaysia (PPA) PRS Online Enrolment by filling up some personal details. Otherwise, you will have to enrol with your PRS provider.
Investors aged 30 and below who choose to enrol through PRS Online Enrolment will not incur any sales charge by the provider. Otherwise, the sales charge may vary from 0.50% to 3.00%.
You can then make a payment for the purchase of the funds online through PRS. Your funds will be transferred to your chosen provider, and you will receive a separate confirmation from them.
After successful registration of your account, you can make subsequent top ups through PRS as well.
Your contributions will go into 2 sub-accounts, which are Sub-Account A and Sub-Account B. Out of your total contributions, 70% of it goes into Sub-Account A and the remaining 30% goes into Sub-Account B.
You can make a partial or full withdrawal from the sub-accounts after retirement at age 55. If you want to make pre-retirement withdrawals, you can do so without penalty from Sub-Account B for certain purposes such as buying a house or healthcare.
PRS funds are offered by private providers that are approved by the Securities Commission of Malaysia. The following is the list of authorised PRS providers, and the schemes offered:
| PRS Providers | Schemes | Funds |
| AHAM Asset Management Berhad | AHAM Private Retirement Scheme |
|
| AIA Pension and Asset Management Sdn Bhd | AIA Private Retirement Scheme |
|
| AmFunds Management Berhad | AmPRS |
|
| Hong Leong Asset Management Bhd | Hong Leong Private Retirement Scheme – Conventional |
|
| Hong Leong Private Retirement Scheme – Islamic |
|
|
| Kenanga Investors Berhad | OnePRS |
|
| Shariah OnePRS |
|
|
| Manulife Investment Management | Manulife PRS NESTEGG Series |
|
| Manulife Shariah PRS NESTEGG Series |
|
|
| Principal Asset Management Berhad | Principal PRS Plus |
|
| Principal Islamic PRS Plus |
|
|
| Public Mutual Berhad | Public Mutual Private Retirement Scheme-Conventional Series |
|
| Public Mutual Private Retirement Scheme-Shariah-based Series |
|
|
| RHB Asset Management Sdn Bhd | RHB Retirement Series |
|
Do note that you will have to pay sales charges, management fees and other costs to your PRS provider on top of the investment amount. You can check the fees of each provider here.
Additionally, you can also invest in PRS funds through investment platforms like FSMOne and Versa. Similarly, you will need to open a Personal Account with these online investment portals if you’re a new customer.
As there are several ways to invest in PRS funds, do compare the fees and charges by different platforms.
Requirements For Withdrawal Of PRS Funds
Once you reach the retirement age of 55, you can make a partial or full withdrawal from your account anytime you want to.
You are also allowed to make a withdrawal pre-retirement age, but depending on the reason of withdrawal, you may be charged with a penalty.
If you’re withdrawing for the purpose of buying a home or healthcare needs, then you may make a withdrawal from Sub-Account B without paying any penalty. If you make a withdrawal for other purposes, you may do so from Sub-Account B, subject to a tax penalty of 8%.
In the event that a member passes away, a nominee or administrator of the member’s estate can make withdrawals. Additionally, if a member experienced total permanent disability, a serious disease or mental disability, a full withdrawal must be made from Sub-Account A and B with no penalty charges.
Read Also: Which States In Malaysia Are The Most Affordable To Live In As A Retiree?
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