There is a need for more awareness on the importance of having additional means of income generation post-retirement, as studies have shown that most Malaysians do not have enough to fund their retirement, AmInvest says.
AmInvest senior vice president for retail and retirement funds Alex Tan said options such as private retirement schemes (PRS) were set up to complement Employees Provident Fund (EPF) contributions, and help Malaysians save more for retirement.
“Many people perceive PRS as a replacement for EPF savings, which is wrong.
“They ask if they can withdraw funds from the EPF and place it in PRS, but the basic principle of investment is to never put all your eggs into one basket,” he told StarBiz.
In May, the EPF said one in three Malaysians did not have a savings account, and most had not saved enough to last them more than five years after retirement.
It said 91% of rural households had zero savings, while in urban households, 86% did not have savings.
It added that as of last year, 68% of EPF members aged 54 had savings of less than RM50,000.
Tan said the key difference with PRS, compared to EPF savings, was that investors could choose the type of investments they wanted.
“We provide consultation to our customers on how much they should save, based on their expected retirement lifestyles.
“We want to empower people with the opportunity to design their savings to suit their future lifestyle,” he said.
In Malaysia, PRS contributors get a tax relief of up to RM3,000 each year, as well as the Government’s PRS youth incentive of RM500 for new eligible contributors (claim here).
Tan said most of their customers were in their 40s, as this was the group that had more disposal income and understood the importance of saving.
“Ideally, you should begin setting aside savings for retirement when you start working.
“You can start with RM100, and you can contribute whenever you have additional cash,” he said.
AmInvest offers nine types of funds, and is among only three providers in the country to provide both conventional and Islamic options.
Its most popular funds are the AmAsia Pacific REITs and the Tactical Bond, which have strong records of double-digit returns.
The AmAsia Pacific REITs accounts for over 10% of AmInvest’s total assets under management of RM42mil, at RM4.4mil in August 2016.
Malaysia’s PRS industry began in 2012, and AMMB Holdings Bhd, through AmInvest, began marketing PRS products in early 2013.
AmInvest is now ranked among the top-five in the industry, out of eight licensed PRS providers in Malaysia.
The other PRS providers are Affin Hwang Asset Management Bhd, AIA Pension and Asset Management Sdn Bhd, CIMB-Principal Asset Management Bhd, Kenanga Investors Bhd, Manulife Asset Management Services Bhd, Public Mutual Bhd and RHB Asset Management Sdn Bhd.