IN a sign of the times we live in – where e-commerce traffic, streaming services usage and cloud storage demand have surged in the past year – so too are more people turning to online avenues to save for their retirement.
In 2020, twice as many new members year-on-year enrolled for a Private Retirement Schemes (PRS) account using the PRS Online service developed by the Private Pension Administrator Malaysia (PPA) – the central administrator for PRS.
“Whether it is via PPA’s PRS Online or through one of our eight PRS providers, it is wonderful to see more Malaysians choosing to include PRS in their retirement savings portfolio,” CEO of PPA Husaini Hussin pointed out.
“Last year’s Jom PRS, Get Treats online enrolment contest was designed to give Malaysians an additional reason to save, and so this higher adoption of financial technology (fintech) is a welcome trend.”
Last year also saw the growth of new PRS members increased by 25% year-on-year with the total net asset value of PRS funds rising by more than 37% to RM4.8 bil in the same period.
The grand prize recipient, Chan Yi Hui, who took home RM3,000 in PRS units, said events of the past year is a good wake-up call and reminder to always have adequate savings. “You can never know what will happen in the future, so it is definitely important to set aside some of your income to be prepared,” said Chan, an aggressive saver who sets aside 30-50% of his income every month.
This sentiment was also shared by second prize recipient Kho Wen Lin and third prize recipient Lai Pei Yee who received a RM2,000 and RM1,000 boost respectively to their PRS savings.
Both said the experience of going through a pandemic made them more cautious with their personal finances, but the series of movement control orders has also inadvertently increased their capacity to save.
“Because of the pandemic, I cut down on a lot of transportation cost, outside food spending and hotel stays because there was no opportunity to travel,” said Kho, who envisions a worry-free retirement where his savings generate enough passive income to cover living expenses.
“So I decided to save the extra money in PRS.”
Aside from having some extra money to save, as well as an easy, convenient and secure way to do so with PRS Online, all prize recipients also said the PRS tax relief by the Government is an encouraging factor for them to save in PRS.
Chan, for instance, said he did the calculations and realised that the tax benefit is substantial. Kho echoed that he sees the tax relief as a good way to save more for the future.
As for Lai, she decided to put her salary increment last year to good use by saving in PRS to give herself that additional tax relief.
The PRS Tax Relief of up to RM3,000 per year will benefit retirement savers for many years to come as it was recently extended until 2025.
A more detailed illustration of one’s potential tax savings through the PRS Tax Relief can be obtained from PPA’s website at https://www.ppa.my/prs-tax-relief/.
As a voluntary scheme regulated by Securities Commission, the PRS industry remained resilient despite a challenging year. – Jan 29, 2021