Monday, June 10, 2013

Private Retirement Schemes (PRS) – A Guide to Malaysia’s Voluntary Private Retirement Scheme – Part 1

THE soft launch of Malaysia’s voluntary Private Retirement Scheme (PRS) in July 2012 was greeted with much fanfare, but what is it exactly, and how can savers / investors / residents in Malaysia benefit from it? explains in the guide below.
Note: The PRS is a separate entity from the Employers Provident Fund (EPF), which is Malaysia’s mandatory Private Retirement Scheme and should not be treated as an alternative.

What is the Private Retirement Scheme (PRS)?
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 employee and employers to the 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 of 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).
PRS vs EPF: A SummaryPRS vs EPF: A Summary
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 5 April 2012) are:

§  AmInvestment Management Sdn Bhd;

§  American International Assurance Bhd;

§  CIMB-Principal Asset Management Bhd;

§  Hwang Investment Management Berhad;

§  ING Funds Bhd;

§  Manulife Unit Trust Bhd;

§  Public Mutual Bhd; and

§  RHB Investment Management Sdn Bhd.

The PRS was ‘soft’ launched in July 2012, with PRS Providers starting to accept funds over the past 6 months.


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.

For more information about other features of PRS such as investment options and benefits,’s guide continues next week.

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