Private Retirement Schemes (PRS) was established in 2012 to accelerate the growth of Malaysia’s private pension industry. The primary objective is to set PRS as the third pillar of the country’s multi-pillar pension framework to supplement the mandatory schemes in improving Malaysians’ living standards after retirement.
As statistics suggest, Malaysians on the whole are not saving enough for their retirement years with reports stating that the mandatory retirement savings alone are insufficient to financially support one’s retirement years. The escalating cost of living and inflation rate as well as longer life expectancy require us to ensure having continuous income after retirement for another 20 years.
With these elements in mind, Malaysians need to be better prepared financially for life after work. The World Bank recommends having at least two-thirds (66%) of our last-drawn salary as replacement income to maintain or continue enjoying our lifestyle. As such, it is important that we save as much and as early as possible while we are gainfully employed. The more we save, the better we would be financially-equipped for our golden years.
While there are many investment options, PRS is uniquely designed as a long-term voluntary savings scheme to help Malaysians save more for their retirement. By contributing in PRS, one stands to enjoy personal tax relief of up to RM3,000 every year. Additionally, employers could also promote retirement wellbeing by contributing in PRS on behalf of their employees with up to 19% tax deduction for the organization.
At Private Pension Administrator Malaysia (PPA), we are pleased to see the industry steadily growing since the launch of PRS. In line with Malaysia’s progress towards becoming a high income nation, PPA will also strive to enhance the benefits and initiatives for PRS while serving and protecting the interests of its Members. PPA remains steadfast in our efforts to grow the PRS industry further and will continue to engage all stakeholders to enhance the retirement savings landscape with PRS.
Datuk Zaiton Mohd Hassan