You are on page 1of 12

1

The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
2
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
PRS Youth Incentive
INTRODUCTION:
• Recognising the need to cultivate a retirement savings culture amongst the
younger demographics whilst appreciating the financial constraints faced by this
group, the Government will make a one-off contribution to provide a head start for
the 4.2 million youths between the ages of 20-30

• The Government will contribute RM500 per person into the PRS accounts of
youths, who have accumulated RM1,000 within a year

ELIGIBILITY:
• Malaysian with existing PPA account or new member
• Individual between ages of 20 to 30 (based on birthdate)
• Minimum RM1,000 gross contribution in a single year within a calendar year
• Effective period – 2014 to 2018
3
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
Establishing the 3rd Pillar
PRS Voluntary 3rd Pillar
Older Generation Moving
Toward Retirement
(11.5% > 60 years by 2020
Younger Generation
4.2 Million Young Adults
(30% of Working Population)
Retirement Income
- Adequacy
- Sufficiency
- Sustainability
4
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
PRS Youth Incentive (PRS YI 500)
Minimum
Contribution of
RM1,000 to a
PRS fund in a
calendar year
A one-time
Govt. incentive
of RM500 invested
into the Member’s
PRS fund
PRS Member
age 20 – 30
years old
In any PRS
Fund with
any PRS
Provider
Qualifying Period:
2014 - 2018
5
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
PPA’s Appointed as Administrator for
PRS Youth Incentive
PPAObtai
Raise awareness of the PRS
Youth Incentive amongst
young adults
Identify individual account eligible
for the Incentive based on the cut off
date of end June and December
every year
Credit individual eligible member
RM500 incentive with their
respective Providers
Obtain youth incentives
from the
Ministry of Finance
6
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
PPA Administrating of PRS Youth Incentive
Government






Provider
Provider
Provider
Provider
Provider
Provider
Provider
Provider
Government makes
one payment to PPA
PPA transfers the contribution payment to respective Provider’s
banks when money is received by PPA from the Government

In giving instructions to Providers, PPA must inform Providers to
create units in sub-accounts A of the respective funds
1)
3)
PPA to receive the
incentive
2)







Young Adults
PRS Accounts With
Providers


RM500
PRS Youth Incentive
to be credited for
eligible PRS
Members
7
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
PPA’s Market Research on PRS
 Of public says it is important to plan for retirement

 Of youth perceive they won’t have sufficient money for retirement

 Of youth have a retirement plan aside from EPF

 Of respondents say “Affordability” is a top consideration among 7
factors when choosing a retirement plan
Definition of Youth = 20 to 30 age group
55%
97%
61%
36%

“The journey to retirement starts with the first step
into the working world.” – DSO
8
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
PRS Affordability
RM 1,000 Minimum Contribution
(Within a calendar year)
Approximately RM85 / month
Approximately RM3 / day
tax relief
RM500
incentive
9
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
PRS Affordability
“Affordability is a Priority issue.” - DSO
Start with 5% or RM100
Make regular monthly contribution through auto
debit or payroll deduction
Increase your PRS contributions to 10% as your pay
increases
Set aside PRS contribution first before spending
Step 1
Step 2
Step 3
Step 4
10
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
Monthly Contributions
Retirement
Fund at age 60
Savings
Accumulated
at age 60
Regular Monthly
Savings Contributed
Compound
Growth
Starting Age
20 (5.0%) 736,000 279,000 (38%) 457,000 (62%)
25 (7.5%) 674,000 272,000 (40%) 402,000 (60%)
30 (10.0%) 585,000 260,000 (44%) 325,000 (56%)
Power of Compounding
If you invest in a PRS fund
that provides you an average
of 6.0% p.a. compounding
growth, by 60, you will have
accumulated …….
The above computation is for illustration purpose only. Please seek advice for your retirement plan
Computation assumes a starting salary of RM2000, with an salary increment of 5%.
11
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
Retirement
Fund
at age 60
Savings
Accumulated
at age 60
Starting Age
= 35
Starting Age
= 40
Starting Age
= 45
Starting Age
20 (5.0%) 736,000 15.5% 20.0% 27.4%
25 (7.5%) 674,000 14.2% 18.3% 25.1%
30 (10.0%) 585,000 12.4% 15.9% 21.8%
Cost of Starting Late
Delaying saving for your retirement will end up forcing you to play catch-
up later in life with higher contributions.
The above computation is for illustration purpose only. Please seek advice for your retirement plan
PPA recommends regular monthly contributions of 5% for members below 25 years old, 7.5% for 25-30 years old, 10% for members above 30 years old
12
The information contained in this document is intended for presentation to the intended audience only and shall not
be disseminated, reproduced or used without the prior approval from PPA.
The End