SC liberalises PRS to enhance competitiveness

By FARA AISYAH / Pic By MUHD AMIN NAHARUL

THE Securities Commission Malaysia (SC) has announced liberalisation measures of the Private Retirement Schemes (PRS) to enhance the competitiveness of the industry.

There are currently eight PRS providers serving more than 455,000 members nationwide. The total size of the industry stands at RM3.5 billion at the end of 2019.

The SC said to enhance long-term growth for PRS members, the measures will provide more flexibility in asset allocation for PRS funds, including allowing conservative funds to invest in foreign markets.

It also includes allowing PRS funds to invest in exchange-traded funds based on physical gold to increase asset diversification into alternative investments.

SC chairman Datuk Syed Zaid Albar (picture) 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.

Given the longer life expectancy of the Malaysian population, PRS providers are now required to gradually move their members to a less risky fund in accordance with their age and is commensurate with members’ risk tolerance.

SC noted that it 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.

In the Budget 2020 announcement last year, Finance Minister Lim Guan Eng said the government will allow for pre-retirement withdrawals for the PRS for the purposes of healthcare and housing with the same terms and conditions as that allowed by Employees Provident Fund and not subject to any penalty for early withdrawal.

SC said members 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 approvedillnesses.

The withdrawal for housing can be used to finance building or purchase a residential property or reduce a housing loan.

PRS is a voluntary long-term savings and investment scheme set up by the SC in 2012 to help Malaysians save for their retirement.