PRS is a voluntary long-term investment scheme designed to help individuals accumulate savings for retirement. PRS seek to enhance choices available for all Malaysians, whether employed or self-employed, to voluntarily supplement their retirement savings under a well-structured and regulated environment.
Each PRS offers a choice of retirement funds from which individuals may choose to invest in based on their own retirement needs, goals and risk appetite. The fund options under a PRS are intended to enhance long-term returns for members within a regulated framework. Assets of each PRS are segregated from the PRS Provider and held by independent Scheme Trustee under a trust.
REGULATORY FRAMEWORK
The Capital Markets and Services Act 2007 (CMSA) empowers the SC to regulate and supervise the PRS industry.
Summary of Roles and Responsibilities
-Securities Commission (SC) Malaysia
-empowered by law to be the regulator of the PRS industry
-provide a regulatory environment
-development of PRS industry
PRS Providers
-exercise the PRS Provider’s powers for a proper purpose and in good faith, in the best interest of the members as a whole
-exercise the degree of care and diligence
-keep complete and accurate records of all information
-not make investments in which it could have a financial interest or derive a benefit without -approval of the Scheme Trustee
-provide interim reports, annual reports and account statements
-exercise the PRS Provider’s powers for a proper purpose and in good faith, in the best interest of the members as a whole
-exercise the degree of care and diligence
-keep complete and accurate records of all information
-not make investments in which it could have a financial interest or derive a benefit without -approval of the Scheme Trustee
-provide interim reports, annual reports and account statements
SCHEME TRUSTEE
Each PRS scheme is required to appoint an approved PRS scheme trustee to actively monitor the operation and management of the fund under the scheme by the PRS Provider to safeguard the interests of members.
The scheme trustees has a fiduciary duty to ensure that the PRS Provider comply with the scheme’s deed and disclosure document. In addition, the PRS scheme trustee provides custodianship of the PRS fund’s assets.
PRS PROVIDERS
- AIA Pension And Asset Management Sdn Bhd
-AmInvestment Management Sdn Bhd
-CIMB- Principal Asset Management Berhad
-Hwang Investment Management Berhad
-Kenanga Investors Berhad
-Manulife Asset Management Services Berhad
-Public Mutual Berhad
-RHB Investment Management Sdn Bhd.
PRS PROVIDERS & FUND OPTIONS
You may choose to contribute to one or more PRS Provider. Under each PRS Provider, you can further choose to invest into one or more funds by either contributing based on the default option (age-based selection) or select a fund based on your preferred choice.
What you Need to Know!
PRS Providers Funds & Performance
PRS Fund selection
a. Growth, Growth & Income & Income Funds
b. Default Option Funds or Self Selected Funds
PRS Fund Risks
Fees & Charges
a. Funds Sales Charge
b. Annual Management Fees
Transaction Fees
PRS Funds Selection Option
You can decide to choose a fund or not to choose a fund and invest based on the default option where contributions are allocated to the core funds based on your age. Each PRS Provider must offer the 3 core funds as a default option in their PRS.
If you choose the default option you will be allocated to the following core funds based on your age grouping:Core Funds Age Asset Allocation
Growth fund Age below 40 years Maximum 70% in equity; 30% in debentures/fixed income and money market instruments
Moderate fund Age 40 years and above but have not yet reached 50 years Maximum of 60% in equity; 40% in debentures/fixed income and money market instruments
Conservative fund Age 50 years and above 80% in debentures/fixed income instruments of which a minimum of 20% must be in money market instruments and a maximum of 20% in equity
Alternatively, you may choose any of the core funds which does not correspond with your age or any of the non-core funds offered by the PRS Provider.
The PRS Provider may offer a range of up to 7 non-core funds under their PRS scheme. You may choose to invest in one or more of these non-core funds based on the fund’s asset allocation and asset classes as well as whether the fund is a conventional, shariah-based, local or offshore fund.
What you Need to Know!
PRS Providers Funds & Performance
PRS Fund selection
a. Growth, Growth & Income & Income Funds
b. Default Option Funds or Self Selected Funds
PRS Fund Risks
Fees & Charges
a. Funds Sales Charge
b. Annual Management Fees
Transaction Fees
PRS Funds Selection Option
You can decide to choose a fund or not to choose a fund and invest based on the default option where contributions are allocated to the core funds based on your age. Each PRS Provider must offer the 3 core funds as a default option in their PRS.
If you choose the default option you will be allocated to the following core funds based on your age grouping:Core Funds Age Asset Allocation
Growth fund Age below 40 years Maximum 70% in equity; 30% in debentures/fixed income and money market instruments
Moderate fund Age 40 years and above but have not yet reached 50 years Maximum of 60% in equity; 40% in debentures/fixed income and money market instruments
Conservative fund Age 50 years and above 80% in debentures/fixed income instruments of which a minimum of 20% must be in money market instruments and a maximum of 20% in equity
Alternatively, you may choose any of the core funds which does not correspond with your age or any of the non-core funds offered by the PRS Provider.
The PRS Provider may offer a range of up to 7 non-core funds under their PRS scheme. You may choose to invest in one or more of these non-core funds based on the fund’s asset allocation and asset classes as well as whether the fund is a conventional, shariah-based, local or offshore fund.
PRS SCHEME FEATURES
Contributions
Individuals
Any individual who has attained the age of 18 years as of the date of the account opening of a private pension account may make a contribution to any fund under the PRS. The PRS is offered to Malaysians and non-Malaysians as well.
Contributions to any fund under the PRS will be maintained in two separate sub-accounts by the PRS Providers as follows:
Individuals
Any individual who has attained the age of 18 years as of the date of the account opening of a private pension account may make a contribution to any fund under the PRS. The PRS is offered to Malaysians and non-Malaysians as well.
Contributions to any fund under the PRS will be maintained in two separate sub-accounts by the PRS Providers as follows:
70% in Sub-account A which must not be made available for pre-retirement withdrawal; and
30% in Sub-account B which would be available for pre-retirement withdrawal subject to payment of an 8% tax penalty on the withdrawal sum.
Individuals have the option to contribute to more than one fund under a PRS Scheme or to contribute to more than one PRS Scheme, offered by different PRS Providers.
Being a voluntary scheme, there are no fixed amounts or fixed intervals for making contributions. Individuals can contribute to the PRS as often as they like and are encouraged to consistently save up to achieve their intended retirement goals.
Individual Tax Relief
The individual tax relief is applicable on gross contribution, i.e. inclusive of upfront charges.
For example, if an individual invested RM3,000 with a Provider and that Provider deducted RM10 for account opening fee, and RM50 for sales charge, the full RM3,000 is eligible for tax relief, and not RM2,940.
Tax relief of up to RM3,000 per annum will be applied on taxable income, for individual contributions made to the PRS for the first 10 years from assessment year 2012. Individuals may claim their individual tax relief for the PRS under Section F-F18 of the BE Form, which can be located at the Lembaga Hasil Dalam Negeri Malaysia (LHDNM) website at www.hasil.gov.my
Contribution statements to support the claim for tax relief may be obtained from the Provider as proof of investment made for the year of assessment.
Employers
Where an employer seeks to contribute to the PRS on behalf of its employees, the employer may enter into an arrangement with one or more PRS Providers of their choice. The amount and frequency of contribution is determined by the employer while employees choose the type of fund(s) under the Scheme offered by the PRS Provider. Where employees do not make a fund selection, the employer contributions would be channelled to the default option of the chosen PRS Provider.
Employer Tax Relief
Employers contributing to PRS on behalf of their employees are eligible for a tax deduction on their contributions above the EPF statutory rate, up to 19% of the contribution. Please note that the employer tax relief is only applicable on the company as an entity.
Switching / Transfer
Switching occurs when a Member requests for a transfer of the existing PRS fund invested in to another PRS fund in the PRS Scheme of the same PRS Provider.
Transfer occurs when a Member requests for a transfer of the existing PRS fund invested in to another PRS fund in the PRS Scheme of another PRS Provider.
Members are allowed to switch between funds in the scheme or transfer the accrued benefits to another PRS of another PRS Provider, subject to the terms and conditions as specified in the scheme’s disclosure document. Please read the scheme’s disclosure document before deciding to make a contribution. If you do not have a copy, please contact the PRS Provider to ask for one.
Transfers can only be instructed between Providers after the first year of subscription to the PRS from the date of first contribution. A transfer request can only be conducted once per calendar year and Members are only allowed to transfer to one fund.
For fees and charges on switching and transfer, please refer to the Providers page of this website under Fees and Charges.
Withdrawals
Request for withdrawals may be made in the following circumstances and as follows:
After the day the member reaches the retirement age (or at any other age as the SC may specify from time to time), withdrawals may be made in part or in full;
Following the death of a member, only full withdrawals may be made;
Prior to the member reaching the retirement age, withdrawals from sub-account B may be made in part or in full; or
Permanent departure of a member from Malaysia, only full withdrawals may be made.
The following are not considered a withdrawal from a Scheme:
Exercise of cooling-off rights;
Withdrawal / Redemption for the purpose of transfer to a scheme by another PRS Provider;
Switching of units of a fund to the units of any other fund of the Scheme.
(Note: Members would be informed if any changes are made to the current specified age.)
With respect to pre-retirement withdrawals, members may only withdraw the amount in sub-account B from each PRS Provider once a year. The first pre-retirement withdrawal can only be requested by a member one year after making the first contribution to any fund under the Scheme (whether the contribution is by an employer or member). While pre-retirement withdrawal may be made for any reason, a tax penalty of 8% on the withdrawal amount will be deducted by the PRS Providers before the balance is credited to the member’s account.
There is no tax penalty for withdrawal upon reaching retirement age of 55 years. Although employees above 55 years of age are still under employment, they are considered as having reached retirement age. As such, retirement withdrawals are allowed with no tax penalty involved.
Although lump sum withdrawals are permitted, members are encouraged to retain their savings for continuous investment under the respective Schemes.
Documentation for Withdrawal
Other than withdrawal due to death and permanent departure, no documents and reasons are required to make a pre-retirement withdrawal.
For pre-retirement withdrawals due to death or permanent departure from Malaysia, the following information and a copy of the following supporting documents must be sent to the PRS Provider as soon as reasonably possible for prior authorisation by the PPA:
Permanent Departure (surrendering of Malaysian work permit or citizenship)
Full Name, NRIC/ identification number and PPA account number; and
Letter of renounciation of Malaysian Citizenship (Form K/ Form Y); or
Letter to confirm surrender of identity card from the National Registration Department (NRD); or
Letter to confirm surrender of identity card from Malaysian Embassy/ High Commission of Malaysia/ Malaysian Consulate in foreign country
Expatriate and Foreign Worker withdrawal
Proof of termination of work
Full Name, passport number and PPA account number; and
Letter of resignation/ termination of contact of service by employer; or
Income tax clearance statement; or
Cancellation of work permit
Non-Working (unemployed) Foreigner withdrawal
Full Name, passport number and PPA account number; and
Proof of cancellation of long term social visit pass
Death
Full Name, NRIC/ identification number (Malaysian) or passport number (Foreigner) and PPA account number; and
Death certificate; and
Letter of Administration / Grant of Probate / Sijil Faraid; and
Copy of Claimant’s NRIC
(Note: In the event of death, the PRS monies will return to the estate of the deceased member to be distributed in accordance to the instruction of the court.)
30% in Sub-account B which would be available for pre-retirement withdrawal subject to payment of an 8% tax penalty on the withdrawal sum.
Individuals have the option to contribute to more than one fund under a PRS Scheme or to contribute to more than one PRS Scheme, offered by different PRS Providers.
Being a voluntary scheme, there are no fixed amounts or fixed intervals for making contributions. Individuals can contribute to the PRS as often as they like and are encouraged to consistently save up to achieve their intended retirement goals.
Individual Tax Relief
The individual tax relief is applicable on gross contribution, i.e. inclusive of upfront charges.
For example, if an individual invested RM3,000 with a Provider and that Provider deducted RM10 for account opening fee, and RM50 for sales charge, the full RM3,000 is eligible for tax relief, and not RM2,940.
Tax relief of up to RM3,000 per annum will be applied on taxable income, for individual contributions made to the PRS for the first 10 years from assessment year 2012. Individuals may claim their individual tax relief for the PRS under Section F-F18 of the BE Form, which can be located at the Lembaga Hasil Dalam Negeri Malaysia (LHDNM) website at www.hasil.gov.my
Contribution statements to support the claim for tax relief may be obtained from the Provider as proof of investment made for the year of assessment.
Employers
Where an employer seeks to contribute to the PRS on behalf of its employees, the employer may enter into an arrangement with one or more PRS Providers of their choice. The amount and frequency of contribution is determined by the employer while employees choose the type of fund(s) under the Scheme offered by the PRS Provider. Where employees do not make a fund selection, the employer contributions would be channelled to the default option of the chosen PRS Provider.
Employer Tax Relief
Employers contributing to PRS on behalf of their employees are eligible for a tax deduction on their contributions above the EPF statutory rate, up to 19% of the contribution. Please note that the employer tax relief is only applicable on the company as an entity.
Switching / Transfer
Switching occurs when a Member requests for a transfer of the existing PRS fund invested in to another PRS fund in the PRS Scheme of the same PRS Provider.
Transfer occurs when a Member requests for a transfer of the existing PRS fund invested in to another PRS fund in the PRS Scheme of another PRS Provider.
Members are allowed to switch between funds in the scheme or transfer the accrued benefits to another PRS of another PRS Provider, subject to the terms and conditions as specified in the scheme’s disclosure document. Please read the scheme’s disclosure document before deciding to make a contribution. If you do not have a copy, please contact the PRS Provider to ask for one.
Transfers can only be instructed between Providers after the first year of subscription to the PRS from the date of first contribution. A transfer request can only be conducted once per calendar year and Members are only allowed to transfer to one fund.
For fees and charges on switching and transfer, please refer to the Providers page of this website under Fees and Charges.
Withdrawals
Request for withdrawals may be made in the following circumstances and as follows:
After the day the member reaches the retirement age (or at any other age as the SC may specify from time to time), withdrawals may be made in part or in full;
Following the death of a member, only full withdrawals may be made;
Prior to the member reaching the retirement age, withdrawals from sub-account B may be made in part or in full; or
Permanent departure of a member from Malaysia, only full withdrawals may be made.
The following are not considered a withdrawal from a Scheme:
Exercise of cooling-off rights;
Withdrawal / Redemption for the purpose of transfer to a scheme by another PRS Provider;
Switching of units of a fund to the units of any other fund of the Scheme.
(Note: Members would be informed if any changes are made to the current specified age.)
With respect to pre-retirement withdrawals, members may only withdraw the amount in sub-account B from each PRS Provider once a year. The first pre-retirement withdrawal can only be requested by a member one year after making the first contribution to any fund under the Scheme (whether the contribution is by an employer or member). While pre-retirement withdrawal may be made for any reason, a tax penalty of 8% on the withdrawal amount will be deducted by the PRS Providers before the balance is credited to the member’s account.
There is no tax penalty for withdrawal upon reaching retirement age of 55 years. Although employees above 55 years of age are still under employment, they are considered as having reached retirement age. As such, retirement withdrawals are allowed with no tax penalty involved.
Although lump sum withdrawals are permitted, members are encouraged to retain their savings for continuous investment under the respective Schemes.
Documentation for Withdrawal
Other than withdrawal due to death and permanent departure, no documents and reasons are required to make a pre-retirement withdrawal.
For pre-retirement withdrawals due to death or permanent departure from Malaysia, the following information and a copy of the following supporting documents must be sent to the PRS Provider as soon as reasonably possible for prior authorisation by the PPA:
Permanent Departure (surrendering of Malaysian work permit or citizenship)
Full Name, NRIC/ identification number and PPA account number; and
Letter of renounciation of Malaysian Citizenship (Form K/ Form Y); or
Letter to confirm surrender of identity card from the National Registration Department (NRD); or
Letter to confirm surrender of identity card from Malaysian Embassy/ High Commission of Malaysia/ Malaysian Consulate in foreign country
Expatriate and Foreign Worker withdrawal
Proof of termination of work
Full Name, passport number and PPA account number; and
Letter of resignation/ termination of contact of service by employer; or
Income tax clearance statement; or
Cancellation of work permit
Non-Working (unemployed) Foreigner withdrawal
Full Name, passport number and PPA account number; and
Proof of cancellation of long term social visit pass
Death
Full Name, NRIC/ identification number (Malaysian) or passport number (Foreigner) and PPA account number; and
Death certificate; and
Letter of Administration / Grant of Probate / Sijil Faraid; and
Copy of Claimant’s NRIC
(Note: In the event of death, the PRS monies will return to the estate of the deceased member to be distributed in accordance to the instruction of the court.)
Members of the public should only deal with licensed PRS Distributors and PRS Consultants.
source:ppa.com
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