Following the various announcements & press releases on the Private Retirement Scheme (PRS), I am pleased to advise that Public Mutual has been approved by the Securities Commission (SC) as a PRS provider. (PRS is regulated by the SC.) The other approved PRS providers are AmInvestment Mgt, AIA, CIMB-Principal Asset Mgt, Hwang Investment Mgt, ING Funds, Manulife Unit Trust, & RHB Investment Mgt.
Some of the benefits & features of PRS:
•PRS is designed to provide choice & flexibility & encourages members to take control of their retirement savings.
•PRS will supplement EPF & other retirement schemes & savings for our retirement. PRS addresses the challenges facing EPF eg. 2 million self employed not covered, EPF savings not enough to last entire retirement, PRS offers choice & flexibility, EPF only legally obligated to provide yearly dividend of 2.5% (but historically higher), EPF mostly fixed income but equities allowed, some diversification if u participate in the EPF Members’ Investment Scheme.
•PRS is a voluntary scheme.
•Each PRS scheme will have a Trustee approved by SC.
•There will be a common Private Pension Administrator (PPA) approved by SC. PPA will also provide a website for members to check their accounts online. Members will receive periodical statements from the PRS provider & a consolidated statement from the PPA.
•Income tax relief of up to RM3,000 p.a. will be given to all members based on their contributions to PRS for 10 years commencing 2012. Eg. a member who is in the 20% maximum tax bracket & who contributes RM3,000 to a PRS will enjoy tax saving of 20% x 3,000 = RM600. This translates into a 20% “discount” on the investment!
•PRS is expected to be launched on 1 Sep 2012 (pls wait for further news).
•All Malaysians & non Malaysians above age 18 are eligible to contribute. There is no maximum age limit. However, accounts that remain inactive for 12 months after age 80 will be surrendered under the Unclaimed Monies Act.
•Employers may make contributions on behalf of employees & enjoy tax deduction of up to 19% of the employee’s salary (inclusive of EPF & other retirement scheme contributions by the employer).
•As specified by SC, Public Mutual will initially be launching 3 core funds (non Syariah compliant) & 3 Syariah compliant funds as follows:
•The unit prices & distributions payable of the funds may go up & down depending on their underlying investments. The daily values will be published in the respective PRS provider’s website daily.
•Interest income received by PRS funds will be exempted from income tax.
•Members who wish to invest in Public Mutual PRS may invest lump sums or by monthly standing instructions from Public Bank.
•Members may switch between funds within the same PRS provider or transfer their funds between PRS providers.
•Fees & charges for investing in PRS will be disclosed in the Disclosure Document which members should read & understand before they invest. I will advise the rates when PRS is launched.
•Investments in PRS will be divided in sub-accounts A & B made up of 70% & 30% respectively of the contributions. Sub-account A can only be withdrawn upon reaching retirement age of 55. Sub-account B can be withdrawn once a year but subject to a tax penalty of 8% which will be deducted from the withdrawal value.
•Full withdrawals may also be made upon permanent departure from Malaysia & by the beneficiary/executor/administrator following the death of the member.
•Before investing, all members must read & understand the Product Highlight Sheet (PHS) which will include a summary of the key info of the funds & the Disclosure Document either in electronic or printed form which will provide more comprehensive info
