Najib launches private retirement schemes
KUALA LUMPUR, July 18 — Prime Minister Datuk Seri Najib Razak today launched a series of private retirement schemes, a highly significant move as it provides employees and the self-employed with an additional avenue to save for their retirement.
The first set of schemes comprising 24 funds by several private retirement scheme providers was approved by the Securities Commission and will be available for offer to the public from September onwards.
A private retirement scheme (PRS) is a voluntary retirement savings scheme structured by private sector fund providers that are licensed and approved by the Securities Commission.
“PRS offers opportunities for the rakyat. In the case of the individual, the PRS can provide an environment for individuals to build retirement funds for career mobility, while for employers, PRS may be utilised as a tool for retaining and attracting talent,” Najib, who is also finance minister, said during the launch of the scheme here.
“I would urge employers to consider using the PRS to offer more attractive remuneration packages in the form of higher contributions to their workers’ retirement benefits, whilst giving their workers the freedom to decide on the type of scheme they wish to participate in,” he added.
Najib said the development of the private pension industry has the potential to change the face of the retirement landscape in Malaysia by increasing and supplementing coverage on a voluntary basis to all sectors of the labour market, including the self-employed and enabling Malaysians to secure an additional and adequate nest egg when they retire.
To encourage participation in PRS, Najib said tax measures were announced in the Budget last year.
This includes personal tax relief of up to RM3,000 for contributions by individuals to PRS approved by the Securities Commission and tax deductions to employers for contributions above the statutory rate of up to 19 per cent of employees’ remuneration.
Malaysia currently has a relatively young population as the average age of its citizens is around 26 years.
“With rising life spans for both men and women, the average Malaysian life expectancy at birth is expected to increase to 80 years — in other words our future generation will have over 20 years to live post retirement.
“The message is clear: Malaysians as savvy consumers must do more to save,” he said.
“My fervent wish would be to ensure that each and every one of our young productive adults and indeed the future generations of Malaysians after them, will have enough savings and financial assets kept aside to be able to enjoy their retirement to the fullest,” Najib said.
In building a solid foundation for the future, Najib said this should be the ultimate goal that not only the government, but all Malaysians, must aspire for.
He said in addition to the mandatory EPF scheme and various public sector pension schemes, the government has also pursued other related initiatives, including the proposal to increase the retirement age to 60, which are needed to reflect the realities of people living longer and possibly outliving their retirement savings.
“A high income nation must have a sound and sustainable social framework to ensure adequate retirement savings. This involves public and private sector participation to ensure that the nation is prepared for the challenges of an aging population in the future,” he said.
Vision 2020, according to Najib, is not merely about reaching a target GDP growth or boosting the per capita income of Malaysia as it is also about improving the quality of life for the rakyat.
“As the economic pie grows through the efforts and endeavours of all of us — the government, the private sector and the rakyat, we also want to ensure the sustainability of the way of life and prosperity that the nation enjoys.
“This is the responsibility that the government does not take lightly and is an integral aspect of our various transformation programme,” he said.
Also present at the launch was Second Finance Minister Datuk Seri Husni Mohamad Hanadzlah, Securities Commission Chairman Datuk Ranjit Ajit Singh and Bursa Malaysia Chairman Tun Mohamed Dzaiddin Haji Abdullah.
The Private Pension Administrator, the final component of the Private Retirement Schemes framework, was also launched at the same time. — Bernama