PRS ideal for those eyeing higher returns
KUALA LUMPUR: Awareness campaigns need to be undertaken to popularise the private retirement scheme (PRS) that was launched by Prime Minister Datuk Seri Najib Razak yesterday.
The new scheme, which is the latest addition to the multi-pillar Malaysian pension landscape, will take off once it is proven to be more attractive than the Employees Provident Fund (EPF).
Individuals and employers would be keeping a close watch on the returns that PRS funds make and comparing its performance to that of EPF's, said economists.
"It all boils down to how well the funds are managed and regulated. If they have better returns (than the EPF), then obviously employers and individuals will be attracted to park their funds there," said Peck Boon Soon, an economist at RHB Research Institute.
With better returns, employers are more likely to decide to contribute towards the PRS as an incentive to attract workers.
Better returns would also help make the PRS more popular among the higher income group, he added.
The EPF tends to invest more heavily in government bonds as this is seen to be a less risky asset class but its investment returns, therefore, while stable, are not as high as they could be.
The PRS offers a chance for individuals to take on risk appetites according to their needs.
"You need to give the PRS some time to take off, but the scheme is a good move in the right direction," said Peck.
It is also a healthy development for the capital market as more investment options will now be available to individuals for their retirement.
Meanwhile, CIMB Group chief executive Datuk Seri Nazir Razak, in response to the launch of the Private Pension Administrator (PPA), said the move was a very significant milestone in the development of a private pension industry.
The PPA is the one-stop centre that governs the PRS.
"Individuals must be able to generate more capital for their retirement or Malaysia will soon have an ageing problem that is now stifling many Western economies.
"This new industry will also boost our capital market as it evolves a new and significant long-term group of investors," he said in a statement.
A total of 24 funds, to be made available to the public in September, will be managed by eight PRS providers.
The eight are AmInvestment Management, American International Assurance, CIMB-Principal Asset Management, Hwang Investment Management, ING Funds, Manulife Unit Trust, Public Mutual and RHB Investment Management.
Individuals and employers would be keeping a close watch on the returns that PRS funds make and comparing its performance to that of EPF's, said economists.
"It all boils down to how well the funds are managed and regulated. If they have better returns (than the EPF), then obviously employers and individuals will be attracted to park their funds there," said Peck Boon Soon, an economist at RHB Research Institute.
With better returns, employers are more likely to decide to contribute towards the PRS as an incentive to attract workers.
 |
The EPF tends to invest more heavily in government bonds as this is seen to be a less risky asset class but its investment returns, therefore, while stable, are not as high as they could be.
The PRS offers a chance for individuals to take on risk appetites according to their needs.
"You need to give the PRS some time to take off, but the scheme is a good move in the right direction," said Peck.
It is also a healthy development for the capital market as more investment options will now be available to individuals for their retirement.
Meanwhile, CIMB Group chief executive Datuk Seri Nazir Razak, in response to the launch of the Private Pension Administrator (PPA), said the move was a very significant milestone in the development of a private pension industry.
The PPA is the one-stop centre that governs the PRS.
"Individuals must be able to generate more capital for their retirement or Malaysia will soon have an ageing problem that is now stifling many Western economies.
"This new industry will also boost our capital market as it evolves a new and significant long-term group of investors," he said in a statement.
A total of 24 funds, to be made available to the public in September, will be managed by eight PRS providers.
The eight are AmInvestment Management, American International Assurance, CIMB-Principal Asset Management, Hwang Investment Management, ING Funds, Manulife Unit Trust, Public Mutual and RHB Investment Management.
Comments
Post a Comment