Private Retirement Scheme in Malaysia

What is a Private Retirement Scheme (PRS)?

The Private Retirement Scheme in Malaysia was launched in approximately 4 years ago back in mid 2012 as a supplement to the Employee’s Provident Fund (EPF) because it was found that most Malaysians relied solely on their EPF for retirement which was severely insufficient. The PRS is a defined contribution scheme which in simple terms – you decide how much you contribute and is regulated by the Securities Commission of Malaysia. The entity that is administrating and handling PRS is the Private Pension Administrator (PPA), every Malaysian interested in contributing to PRS is required to create an account with them (more on this later).

Private Retirement Scheme (PRS)

Photo source: PPA

Benefits of PRS

So, why contribute to PRS?

PRS Tax Relief

The Malaysian government, in a bid to encourage everyone to fund their retirement provided a few benefits in the form of tax reliefs and a PRS youth incentive. Individual who contribute to a PRS can enjoy up to RM3,000 tax relief per year of assessment. Many confuse this as a RM3,000 saved every year when you contribute.

This is not the case, instead, think of the RM3,000 as the cap, if you invest RM3,001 in a PRS, you only get the relief of up to RM3,000. So, potentially an individual taxed at the highest rate can save up to RM780 per year in taxes if he/she contributed to a PRS. This however makes contributing more than RM3,000 a year unnecessary.

As per the table below, you will notice that the maximum savings an individual can get is RM780, if he is in the highest taxable bracket and is taxed at 26%.

PRS Tax Relief Table

PRS Youth Incentive

The PRS Youth Incentive is an initiative by the Malaysian government to encourage young Malaysians to start saving and investing for retirement. A one-off incentive of RM500 will be contributed by the Government to Malaysian individuals who qualify for the incentive.

Who is eligible?

  • Malaysian citizens only;
  • Aged between 20-30 years;
  • A minimum gross investment amount of RM1,000 must be accumulated in a single PRS fund of a single PRS provider within a calendar year, between 2014 till 2018

With the above mentioned incentives, I myself have contributed RM3,000 every year to a Private Retirement Scheme through Fundsupermart. I chose them because prior to PRS, I’ve been investing in Unit Trusts and Mutual Funds through them. Everything is done online and is simple to follow. Some of the forms will require your signature and thus will be mailed/couriered to you. You may sign up for an account here and just follow their instructions.

I chose to contribute to the PRS funds as seen below:

PRS Fundsupermart

There are a total of 8 PRS Providers:

  • Affin Hwang Asset Management Berhad
  • AIA Pension and Asset Management Sdn. Bhd.
  • AmInvestment Services Berhad
  • CIMB-Principal Asset Management Berhad
  • Kenanga Investors Berhad
  • Manulife Asset Management Services Berhad
  • Public Mutual Berhad
  • RHB Asset Management Sdn. Bhd.

The Disadvantages of a PRS

Yes, I invested in a PRS and the tax relief as well as the RM500 youth incentive wasn’t too bad. However, a Private Retirement Scheme is in essence a Unit Trust / Mutual Fund, and you know how much I hate them here in Malaysia as I’ve mentioned in my previous post Fundsupermart and Unit Trusts in Malaysia. The same ridiculous fees are charged by the providers regardless if you make a profit or a loss. Notice that my total profit averages to a measly 3.15% after 2 whole years, of course this is not including the tax relief afforded by the government.

Furthermore, your money is locked in until you reach the age of 55. Early withdrawal (with tax penalties) is allowed under some circumstances which are all specified at the PPA’s website.


All that being said, I will still continue to contribute RM3,000 each year solely because of the tax relief which I view as a guaranteed return provided by Putrajaya. I am in no way put off by the long wait till I’m 55 because I have surplus savings. However, the same cannot be said for my fellow Malaysians out there who are struggling to make ends meet.

Will you continue to contributed to a PRS this year? Have you taken advantage of the tax incentives provided by our Government?

Thank you for reading.

Fundsupermart and Unit Trusts in Malaysia


I received Fundsupermart‘s red packets in the mail (Ironman not included) today just in time for CNY this year.


Red Packets from Fundsupermart

As some of you may know, I’ve been consistently investing in Private Retirement Scheme (PRS) funds through Fundsupermart for 2 years now. The RM500 youth incentive from the government got me started and I’ve been investing RM3,000 annually since then. The tax breaks given by the government are treated as a sort of guaranteed return for my portfolio. One may argue though that the fact that we’re unable to withdraw the funds until after the age of retirement is a drawback. I, however, treat my annual RM3,000 deposits into PRS as my security fund, together with fixed deposits and my EPF.

Unit Trust

I used to invest in Unit Trusts (UT) a few years ago but have since switched over to shares. The UT industry in Malaysia is still in its prehistoric age with exorbitant fees and lousy returns. Some are even charging fees as high as 5% per annum, compound that and you will be paying more than half your wealth in fees. It is my wish and hope that in the future, companies like Vanguard will be able to set up shop in Malaysia. I’d then gladly throw half, if not all my wealth in a passively managed index fund.

As I plan to be transparent with all my investments, I present to you my UT and PRS holdings. I’ve kept some of my investments in bond funds as I have no other means other than UTs to diversify into fixed income investments.

FSM PRS UT Holding

As at 31 December 2015, 37% of my wealth lies in my secure bucket – ie. the bucket where the investments are considered safe. Funds in my savings & current accounts, fixed deposits, PRS funds, EPF and my bond funds make up my secure bucket. I intend to dip into my secure bucket and reduce it to around 30% if and when the opportunity arises.

Till then, happy investing.


As many of you know, I’m not a big proponent of Unit Trusts and Mutual Funds here in Malaysia due to their excessive and ridiculous fees. However, if I were to recommend a platform for Malaysian investors to purchase their funds, it would be Fundsupermart. They offer the lowest fees currently. However, the fees charged by the funds themselves are another matter altogether.

So, if you’re interested in opening an account with Fundsupermart, you may do so hERE.