69) Benefits to Individuals by Savings into PRS.
PRS stands for Private Retirement Scheme.
These are the benefits when you start to save/contribute into PRS in Malaysia.
List of Benefits to Individuals:
1) Income Tax relieve up to RM3000/year till 2021.
2) Lower Cash Initial service charge compared to cash investment into Unit Trust equity fund.
3) Savings in PRS are protected from Judgement Debt (bankruptcy).
4) Savings focus for Retirement purpose. To keep savings in Sub-Account A until retirement age of 55.
5) Only able to withdraw from Sub-Account B once a year with penalty 8% to discourage withdrawal before Retirement age.
6) Prevent the temptation to withdraw money for other purposes.
7) Start the habit of Save First, Spend Later.
8) Retirement savings money is managed by Professional fund managers.
9) Enhance your retirement funds.
10) Create an Emergency Fund with PRS Sub-Account B.
Here is a short video on the benefits to individuals.
Example of Income Tax Savings:
If you are in the 20% tax bracket, your RM3000 savings into PRS will reduce your taxable income by RM3000. Therefore, you pay less tax by RM600 (3000 x 20%).
Additional Benefit:
The amount can be accumulated from the various PRS accounts of Conventional Series or Shariah Series.
The insurance coverage is subject to a maximum amount of RM100,000 per investor, per series.
This means you can be covered RM100,000 for Conventional Series funds and another RM100,000 for Shariah Series funds.
Eligibility: Age 18-59 yrs . The insurance coverage will cease once the PRS contributor reaches age 60.
Please refer to your PRS Consultant on the benefit above as not all PRS Provider provide this benefit.
The person who saved or put money is called a Contributor, not an Investor.
The proper definition is to Contribute to your PRS Account, not to invest.
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