SC liberalises regulation on PRS to enhance competitiveness of the industry

SC chairman Datuk Syed Zaid Albar

KUCHING, Feb 21: The Securities Commission Malaysia (SC) today announced liberalisation measures of the Private Retirement Schemes (PRS) to enhance the competitiveness of the fund management industry.

The capital market regulator in a media statement issued from Kuala Lumpur said the measures will provide more flexibility in asset allocation for PRS funds.

The move it said will allow conservative funds to invest in foreign markets and for PRS funds to invest in exchange-traded-funds to enhance long-term growth for PRS members.

SC’s chairman Datuk Syed Zaid Albar said, “The PRS industry offers Malaysians an alternative channel to supplement their retirement saving.

“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.

Given the longer life expectancy of Malaysian population, the SC pointed out that 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.

The capital market regulator believed that the move 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.

Following Budget 2020, the SC noted that PRS members are now permitted to make pre-retirement withdrawals without incurring tax penalty for healthcare and housing purposes.

It gathered that 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 approved illnesses.

It noted the withdrawal for housing can be used to finance building or purchase of a residential property or reducing a housing loan.

In the meantime, the SC said further details on the withdrawal measures can be found on the Private Pension Administrator’s (PPA) website.

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

The capital market regulator said there are currently eight PRS providers serving more than 455,000 members nationwide.

As at end of 2019, the SC observed that the total size of the industry stood at RM3.5 billion.—DayakDaily