THE Securities Commission Malaysia (SC) has announced liberalisation measures for Private Retirement Schemes (PRS) to enhance the competitiveness of the industry.
The measures will provide more flexibility in asset allocation for PRS funds, such as allowing conservative funds to invest in foreign markets and for funds to invest in exchange-traded-funds based on physical gold to increase asset diversification into alternative investments.
SC chairman Datuk Syed Zaid Albar said the PRS industry offers Malaysians an alternative channel to supplement their retirement savings.
“These liberalisation measures were adopted after a robust review process undertaken by the SC, in consultation with the industry and Private Pension Administration Malaysia, to encourage PRS members to grow their investments.
“Meanwhile, PRS also enables its members to access funds to ease their financial burden in times of need,” he said in a statement on Feb 21.
Given the longer life expectancy of the people, the regulator said PRS providers are now required to gradually move their members to a less risky fund in accordance with their age and to commensurate with members’ risk tolerance.
It said this will help to reduce the market risk exposure for members who opt for default funds (growth, moderate and conservative) that are matched against their age.
PRS is a voluntary long-term savings and investment scheme set up by the SC in 2012 to help Malaysians save for their retirement.
Following Budget 2020, PRS members are now permitted to make pre-retirement withdrawals without incurring tax penalty for healthcare and housing purposes.
They are allowed to make withdrawals for self or immediate family members to cover for 91 types of illnesses, including paying for medical equipment or medication for the listed illnesses.
There are currently eight PRS providers serving more than 455,000 members nationwide. As of end-2019, the total size of the industry stood at RM3.5 bil.
The PRS providers include Affin Hwang Asset Management Bhd, AIA Pension and Asset Management Sdn Bhd, AmFunds Management Bhd and Kenanga Investors Bhd. – Feb 21, 2020
