prs youth incentive 27mac
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The information contained in this document is intended for presentation to the intended audience only and shall notbe disseminated, reproduced or used without the prior approval from PPA.
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The information contained in this document is intended for presentation to the intended audience only and shall notbe 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 period2014 to 2018
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The information contained in this document is intended for presentation to the intended audience only and shall notbe disseminated, reproduced or used without the prior approval from PPA.
Establishing the 3rd Pillar
PRS Voluntary 3rd Pillar
OlderGeneration MovingToward Retirement(11.5% > 60 years by 2020
Younger Generation4.2 Million Young Adults
(30% of Working Population)
Retirement Income
- Adequacy- Sufficiency
- Sustainability
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The information contained in this document is intended for presentation to the intended audience only and shall notbe disseminated, reproduced or used without the prior approval from PPA.
PRS Youth Incentive (PRS YI 500)
Minimum
Contribution of
RM1,000 to aPRS fund in a
calendar year
A one-time
Govt. incentive
of RM500 investedinto the Members
PRS fund
PRS Member
age 2030
years old
In any PRS
Fund with
any PRSProvider
Qualifying Period:
2014 - 2018
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The information contained in this document is intended for presentation to the intended audience only and shall notbe disseminated, reproduced or used without the prior approval from PPA.
PPAs Appointed as Administrator for
PRS Youth Incentive
PPAObtai
Raise awareness of the PRSYouth Incentive amongst
young adults
Identify individual account eligiblefor the Incentive based on the cut off
date of end June and Decemberevery year
Credit individual eligible memberRM500 incentive with their
respective Providers
Obtain youth incentives
from the
Ministry of Finance
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The information contained in this document is intended for presentation to the intended audience only and shall notbe 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 Providers
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 AdultsPRS Accounts With
Providers
RM500
PRS Youth Incentive
to be credited for
eligible PRSMembers
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The information contained in this document is intended for presentation to the intended audience only and shall notbe disseminated, reproduced or used without the prior approval from PPA.
PPAs Market Research on PRS
Of public says it is important to plan for retirement
Of youth perceive they wont 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 stepinto the working world.DSO
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The information contained in this document is intended for presentation to the intended audience only and shall notbe disseminated, reproduced or used without the prior approval from PPA.
PRS Affordability
RM 1,000 Minimum Contribution(Within a calendar year)
ApproximatelyRM85 / month
Approximately RM3/ day
tax reliefRM500incentive
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The information contained in this document is intended for presentation to the intended audience only and shall notbe 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 fundthat 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%.
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The information contained in this document is intended for presentation to the intended audience only and shall notbe 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
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The information contained in this document is intended for presentation to the intended audience only and shall notbe disseminated, reproduced or used without the prior approval from PPA.
The End