Online enrolment for PRS in the works
> Private Pension Administrator Malaysia aims to make joining Private Retirement Schemes a fully digital process
PETALING JAYA: The Private Pension Administrator Malaysia (PPA) plans to roll out online enrolment of new Private Retirement Schemes (PRS) members this year with a minimal initial contribution, said its CEO Husaini Hussin ( pix).
There is no online facility per se yet for signing up for PRS. Currently, to become a PRS member, one needs to go through any of the eight PRS providers in the country. Some providers offer online registration for PRS but this is limited to only existing customers.
“What PPA is planning on doing this year is to offer a pure online transaction (facility) where any Malaysian on the street can just sign up. And you don’t need to be an existing member of any providers. It (the plan) is still in the pipeline. We want to make it affordable so that you don’t require a lot of initial investment to start. We also want to make it simple, where you can easily perform online transactions through smartphones,” Husaini told SunBiz in an interview recently.
He said PPA, the central administrator for PRS, is in the midst of the developing the online portal and will need to obtain approval from Securities Commission Malaysia (SC) before it is implemented.
“SC is also keen to promote financial technology in the capital market and this is in line with what they wish to see this year – the digitalisation of enrolment for PRS,” said Husaini.
He said this move will allow people aged 18 and above to open a PRS account online. The guiding principle for the online portal, apart from it being convenient, accessible and affordable to everyone, is an alternative means to sign up to PRS.
“The way that providers are doing now will continue, because they offer value-added services, such as financial advisory.
“We’re looking at perhaps bringing the initial contribution down to a more affordable level, maybe RM50 or RM100 to open an online PRS account. Right now, different providers have different initial contribution requirement, from RM100 up to RM1,000,” said Husaini.
PRS members stood at 231,727 as at March 31, 2017, with a net asset value of RM1.64 billion.
Husaini said some millennials do not even have RM100 to invest but stressed that PPA cannot ignore the millennial segment because young people need to start thinking of retirement. For youths, the government has offered an enhanced PRS youth incentive of RM1,000.
In October 2016, PPA launched the PRS OnlineTop Up facility, an online service by PPA to help PRS members make additional contributions into their existing PRS funds.
“We want to get more into digitalisation, to introduce online transactions to facilitate members doing transactions with providers.
“In the financial industry, there is a strong push to move transactions online that is secured, convenient and fast. This year we’re building the momentum to introduce online enrollment,” said Husaini.
PRS is voluntary, and as with everything that it voluntary, it takes time to convince people on the importance of saving for retirement from young.
“We don’t want people to think of PRS as a tax-saving tool (taxable residents are entitled to tax relief of RM3,000 per year). We want them to save more for retirement and see the tax relief as icing on the cake. They still need to have the cake, which is to save more for retirement.
“Getting people to be aware (of PRS) is one thing, getting them to set aside additional savings is also challenging in the current economic situation.
“Most of them recognise that they need to set aside money but they have to make a hard choice to look at what they can cut in their lifestyle to save more for retirement,” Husaini said.
PPA recommends that people save one third of their monthly income for retirement.
“We typically recommend an additional 10% savings on top of the EPF’s (Employees Provident Fund) 23% (12% employer, 11% employee),” said Husaini.