Basically, the PRS is a defined contribution pension scheme which allows people (or their employers) to voluntarily contribute into an investment vehicle for the purposes of building up their retirement income.
In a Malaysian retirement framework, it is to be complemented with (and not a substitute for) the mandatory contributions made by both employees and employers to the Employees Provident Fund (EPF) scheme.
Having a voluntary scheme in addition to the EPF also allows private company employees and self-employed persons to voluntarily contribute towards their retirement in a systematic way.
What are the Similarities Between the PRS and the EPF?
• Retirement purpose: Both the EPF and PRS schemes are for building up a person’s retirement assets and income.
• Tax Benefit: Tax relief is given for contributions to both schemes (up to RM6,000 a year for EPF; RM3,000 per year for PRS).
Note: The PRS is a separate entity from the EPF, which is Malaysia’s mandatory PRS and should not be treated as an alternative.
PRS Providers
PRS Providers are fund management firms which are approved by the PRS administrators to manage the investment vehicles that contributions get paid into.
The eight PRS Providers approved (as of April 5, 2012) are:
• AmInvestment Management Sdn Bhd
• American International Assurance Bhd
• CIMB -Principal Asset Management Bhd
• Hwang Investment Management Bhd
• ING Funds Bhd
• Manulife Unit Trust Bhd
• Public Mutual Bhd
• RHB Investment Management Sdn Bhd
The PRS was “soft” launched in July 2012, which means that PRS Providers were not yet ready to accept funds, and all the relevant parties would spend the next few months educating potential members and the public on the various aspects of the PRS.
Contributions
Unlike the EPF, PRS contributions are not mandatory, and they can be made by either an individual or an employer. There is no statutory minimum amount (although individual PRS Providers may specify a minimum amount as per their own internal investment policy) and no statutory time interval for contributions.
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