PRS Youth Incentive

To encourage the youth to start their retirement savings while young, the Private Retirement Scheme (PRS) Youth Incentive was launched in which the Malaysian government will contribute a one-off payment of RM1,000 to a qualified individual’s PRS account with a minimum contribution of RM1,000, as head start for their retirement savings.  This incentive is open to all new and existing Private Pension Administrator (PPA) account holders who are Malaysian citizens and between the ages of 20 to 30 years old at the point of qualifying for the incentive regardless of whether the person is with or without Employer’s Provident Fund (EPF) or KWSP account.

Mechanics

  • Private Pension Administrator will determine members who qualify for the PRS Youth Incentive. And those who are eligible will simply be notified.  There is no need for them to apply for the incentive.
  • The incentive scheme was launched only on 2014 and is not retroactive. Those who have reached the age of 31 after the incentive’s implementation does not qualify.
  • Only the contributions of the young PRS member in his individual capacity to his or her PRS account can qualify for the incentive. This includes employer contributions that are deducted from the salary of the PRS member. However, the matching contributions to the PRS member’s account made by the employer are excluded.
  • To reach the minimum contribution of RM1,000, qualified individuals can either make a one-time lump sum contribution of RM1000 or make staggered contributions within a year to a specific PRS fund or provider. Parents or guardians can pay contributions on the PRS account of their employed children aged 20-30 from 2014 to 2018, so that they can reach the minimum contribution of RM1,000.
  • The incentive will not be given in cash. Instead, the amount of RM1,000 will be credited into the fund in the form of units of the member’s selected PRS fund.The number of units will be computed based on the extant Net asset value (NAV) per share or unit price of said fund(s) at the valuation point.
  • For eligible members who have more than one PRS fund, the incentive will be bestowed to the fund which first attained the minimum contribution of RM1,000. In case, two or more funds simultaneously reached the gross amount of RM 1000 via a single contribution, the incentive will be equally distributed among the funds that reached said eligible amount.
  • The incentive of RM1,000 from the government is given to the PRS fund in full. The Private Pension Administration (PPA) cannot withhold fees from it nor can the fund provider deduct sales charges form it. However, the incentive is not entitled to a tax relief claim.
  • The government’s RM1,000 incentive will be given to qualified PRS members only once. It is not recurring every year or for every PRS fund that reaches the gross amount of RM1000.  Qualified PRS members can only benefit from it in one single occasion.  Moreover, the incentive is only valid until the end of 1018 unless the government extends it.