{"id":3301,"date":"2023-06-30T09:23:13","date_gmt":"2023-06-30T01:23:13","guid":{"rendered":"http:\/\/blog.imoney.my\/?p=3301"},"modified":"2024-02-02T14:29:56","modified_gmt":"2024-02-02T06:29:56","slug":"prs","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/prs","title":{"rendered":"What Is The Private Retirement Scheme (PRS), And How Does It Work?"},"content":{"rendered":"

Want to buff up your retirement savings, or just trying to reduce your taxable income next year? Private Retirement Schemes can help you do both. Here\u2019s what you need to know to get started.<\/p>\n

<\/span>What is a Private Retirement Scheme (PRS)?<\/span><\/h2>\n

PRS is a voluntary investment scheme to help you save for retirement. Under the scheme, you can invest in approved unit trust funds that are managed by PRS providers (Public Mutual, Kenanga, etc.).<\/p>\n

The Private Pension Administrator Malaysia<\/a> (PPA) serves as the central administrator of PRS. This means that it is responsible for managing your account and facilitating transactions.<\/p>\n

<\/span>What\u2019s the difference between PRS and EPF?<\/span><\/h2>\n

PRS is sometimes compared to the Employees Provident Fund (EPF), as they are both investment schemes that help you save for retirement. But PRS is not meant to replace EPF. Instead, it\u2019s a supplementary scheme to help you boost your savings.<\/p>\n

Here\u2019s how PRS and EPF compare:
\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t
<\/td>PRS<\/th>EPF<\/th>\n<\/tr>\n<\/thead>\n
Contribution<\/td>Voluntary<\/td>Mandatory for employees<\/td>\n<\/tr>\n
Guaranteed returns<\/td>None<\/td>2.5%<\/td>\n<\/tr>\n
Account structure<\/td>Sub-Account A: 70% of contribution
\n
\nSub-Account B: 30% of contribution<\/td>		Akaun 1: 70% of contribution
\n
\nAkaun 2: 30% of contribution<\/td>\n<\/tr>\n
Tax relief<\/td>Up to RM3,000<\/td>Up to RM7,000 (public servant) or RM4,000 (non-public servant)<\/td>\n<\/tr>\n
Withdrawal age<\/td>55<\/td>55<\/td>\n<\/tr>\n
Pre-retirement withdrawal<\/td>Maximum once a year from Sub-Account B unless permanently leaving the country; may incur 8% tax penalty<\/td>From account 2 for approved expenses<\/td>\n<\/tr>\n
Fees<\/td>Sales charge up to 3%; annual management fees up to 5%<\/td>None<\/td>\n<\/tr>\n
Shariah-compliant<\/td>Yes, but depends on unit trust fund selection<\/td>Yes, but depends if you opt for Simpanan Shariah<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n

<\/span>What are the advantages and disadvantages of PRS?<\/span><\/h2>\n

Advantages:<\/strong><\/p>\n