PRS An Avenue For Malaysians To Save For Retirement
Malaysians need to know the importance of generating retirement income as studies have shown that Malaysians do not save enough for their golden years, said AmInvest.
The fund management house finds the urgency because studies have shown that most Malaysians have insufficient funds for their retirement.
The senior vice president for retail and retirement funds of AmInvest Alex Tan, said retirement savings options such as private retirement schemes (PRS) were set up to complement Employees Provident Fund (EPF) contributions, and help Malaysians save more for retirement.
Many people perceive PRS as a replacement for EPF savings, which is wrong.
“They ask if they can withdraw funds from the EPF and place it in PRS, but the basic principle of investment is to never put all your eggs into one basket,” he added.
Earlier this year, EPF said one in three Malaysians did not have a savings account, and most had not saved enough to last them more than five years after retirement.
The report by The Star also said that 91% of rural households had zero savings, while in urban households, 86% did not have savings. As of 2015, 68% of EPF members aged 54 had savings of less than RM50,000.
Tan went to explain that the key difference between PRS and EPF savings, was that investors could choose the type of investments they wanted.
“AmInvest would provide consultation to our customers on how much they should save, based on their expected retirement lifestyles, because we want to empower people with the opportunity to design their savings to suit their future lifestyle,” he said.
In Malaysia, PRS contributors get a tax relief of up to RM3,000 each year, and the Government’s PRS youth incentive of RM500 for new eligible contributors below 30 years old.
Tan also found that most of their customers were in their 40s, as this age group had more disposable income and understood the importance of saving. However, he said, ideally, one should begin setting aside savings for retirement when they start working. They can start with RM100, and contribute whenever there is additional cash.
Malaysia’s PRS industry began in 2012, while AmInvest began their PRS products in early 2013. AmInvest is now ranked among the top-five in the industry, out of eight licensed PRS providers in Malaysia.
The other PRS providers include Affin Hwang Asset Management Bhd, AIA Pension and Asset Management Sdn Bhd, CIMB-Principal Asset Management Bhd, Kenanga Investors Bhd, Manulife Asset Management Services Bhd, Public Mutual Bhd and RHB Asset Management Sdn Bhd.