The previous articles in our series on Your Personal Journey to Financial Security have talked about why you should consider investing your money in order to ensure a more secure future for yourself and your loved ones, and how to find the right experts to help guide you along your journey.
For most people, the ultimate goal is to be able to retire comfortably, by ensuring that they have adequate savings or investments to sustain them in their old age. However, there can be no denying that the hardships brought about by the pandemic in the past two years have made achieving this goal a lot more challenging.
Various economists have warned that a retirement crisis is on the horizon. The most recent figures released by the Employees Provident Fund (EPF) show that almost half of its members (46%) have less than RM10,000 in their account, and that the percentage of its members who are on track to reach the basic savings threshold (RM240,000 by age 55) has dropped from 36% to 27%, exacerbated by the number of people withdrawing from their EPF accounts to offset their daily expenses during the pandemic.
However, it doesnât have to be that way. The best time to act is now, and the earlier you can begin saving for your retirement, or even growing your wealth again after it has taken a hit, the better.
This time, we would like to touch upon a wealth-building option known as a Private Retirement Scheme (PRS). PRS are offered and managed by PRS Providers and are governed by the Securities Commission Malaysia.
As the name indicates, a PRS is voluntary long-term savings and investment scheme designed to help you save more for your retirement. First introduced in 2012, it is meant to help encourage people to contribute to their retirement savings.
Investments in PRS are structured in the following manner: contributions are divided into two sub-accounts, and you can only make withdrawals once you reach retirement age, or in case of death or emigration. You are permitted to make partial withdrawals before then, but you will incur a penalty fee.
Contributions to PRS are entirely voluntary, and offer more diversification in terms of investment options. PRS seek to enhance choices available for all Malaysians, whether employed or self-employed, to supplement their retirement savings under a well-structured and regulated environment. Each PRS offers a wide range of retirement funds from which you may choose to invest in based on your retirement needs, goals and risk appetite.
Why invest in a PRS?
Contributing in PRS may be one of the best things you can do for your retirement. Hereâs why:
