In short, 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.
Similarities of PRS with the EPF:
1. Retirement Purpose: Both the EPF and PRS schemes are for building up a person’s retirement assets and income.
2. Tax Benefit: Tax relief is given for contributions to both schemes (up to RM6,000 a year for EPF, RM3,000 for PRS)
PRS vs EPF: A SummaryFeature Differences PRS EPF
| Feature Differences | PRS | EPF |
| Contribution Type | Voluntary | Mandatory |
| Contribution Amount | No statutory minimum or maximum | Statutory minimum (11% Employee, 12-13% Employer) |
| Contribution Frequency | No statutory interval | Statutory Monthly Contribution |
| Contribution Paid to | Individual PRS Providers | EPF Directly |
| Yearly Personal Tax Relief | RM3,000 | RM6,000 |
| Partial Withdrawal | From Sub-Account B only, and 8% Tax Penalty | Account 2 only, specific reasons no penalty |
| Selection of Fund Investments | Freedom of Selection (among PRS Providers) | Freedom only on Partial Amount (EPF-MIS) |
| Dividend Policy | No statutory minimum (depends on Fund performance) | Minimum 2.5% p.a. |
PRS Providers
The 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 at 5 April 2012) are:
CIMB-Principal Asset Management Bhd;
AmInvestment Management Sdn Bhd;
American International Assurance Bhd;
Hwang Investment Management Berhad;
ING Funds Bhd;
Manulife Unit Trust Bhd;
Public Mutual Bhd; and
RHB Investment Management Sdn Bhd.
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