M’sia private pension plans, long-term investment savings

[This is a sponsored article with Private Pension Administrator Malaysia.]

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Saving for retirement was repeatedly emphasized. However, I find it difficult to place importance on retirement planning, as it is still a distant future for me.

But I often watch my mother enjoying her retirement, traveling with her friends without worrying too much about her financial obligations, and I think to myself, “I wish I was in this position too”.

Meanwhile, after decades of hard work, my CEO’s retired parents have found the freedom to start their own farm with a foster family concept.

These goals did not appear overnight when they retired; they had already started making these plans during their working years, when our parents could actively set aside funds to achieve their goals.

Based on the experiences of our parents, perhaps the current generation of workers who want a comfortable retirement can be inspired by some of their advice.

So, we got our parents to share their retirement planning strategies that helped them achieve their goals today.

Stay thrifty to grow your savings

While working as an after-sales account manager, my mother Quinnie wanted to vacation in different countries every year.

But it was expensive at the time, with the added burden of household expenses becoming more demanding as his family commitments grew (raised me, for my part) in line with inflation.

Quinnie decided her best option was to save as much as possibleand decided to travel when she retired.

Quinnie on her travels / Image credit: Quinnie

His method of saving was to create two different bank accountswhere 20% of his salary would be kept in his savings account which received a small interest, while 80% was transferred to his spending account.

But having a family can sometimes derail even strict savings plans because emergencies can’t be foreseen.

Quinnie acknowledged this, detailing: “Yes, there are a lot of expenses to pay, especially when the children are still studying, my mother’s monthly allowance, the maid’s salary, the bills, the food, etc. .”

To manage all these obligations, she would strictly ignore the sales held in malls, although she loves the activity of shopping. “I knew I had the potential to buy things I didn’t really need, and it would make me spend unnecessarily,” she added.

My mom’s favorite holiday poses / Image credit: Quinnie

Sarah, the mother of our content production manager, echoed a similar retirement goal and savings strategy.

A stable employee as a radiotherapist in a public hospital, she would have keep most of their salary in the bank and other savings plans. Only a small portion was spent to help her husband meet family expenses, personal needs or special occasions.

“Since my first paycheck, I’ve practiced my motto, ‘save first, buy later’. I will only get what I want after I have saved enough,” Sarah said, adding that she wait for sales and compare prices from different outlets before buying.

Sarah on vacation in the UK / Image credit: Sarah

Highlighting her caution as a parent, Sarah added that she and her husband have also been using the same car for over 20 years. “My husband took very good care of the car, which is often called his first wife,” she joked.

Additionally, the family remained in hospital-provided housing with minimal rent until Sarah retired. “Although my husband bought our house in 2004, we didn’t stay there but rented it out because it was too far from my place of work,” she recalls.

Dr Awangku spending time with his friends

Likewise, our editor’s father, Dr. Awangku, would like save 10% of salary to work as a lecturer in a public university.

He now spends his retirement enjoying the outdoors, having coffee with friends and relatives, while learning about cosmology.

Adjust their lifestyle to adopt pensions

As civil servants, Sarah and Dr Awangku have retirement plans in addition to their other savings strategies.

Sarah has spent her retirement trying out sewing and tailoring / Image credit: Sarah

While planning financially for their retirement, public servants took into account and adjusted their lifestyle to take into account their new form of salary.

They were able to do this by ensuring that all loans were paid before retirementfrom mortgages to car payments.

Dr Awangku (far right) hangs out with his friends / Image credit: Dr Awangku

Invest in assets to work for you

Beyond saving money and paying off debts as quickly as possible, our CEO’s father, David, said he was able to invest in assets like properties.

Now he is enjoying the process of researching and experimenting with a foster family concept, in addition to building the aforementioned farmhouse.

David builds his host family / Image credit: David

However, it should be noted that real estate can be a tricky investment strategy. Although Dr. Awangku has tried to invest in real estate, he revealed that he has yet to profit from it.

It shows that what works for some may not work for others.

There are many options for planning for retirement today

While it’s important to learn from our past generation, it’s worth pointing out that times have changed. Inflation is going up more than before and properties aren’t as affordable as they were in our parents’ days.

While we may still achieve the same goals, the way millennials and Gen Zs plan for retirement may be completely different than our parents.

For example, these generations will have greater access to online resources, with more robust services than ever before.

An example includes the Private pension plans (PRS), introduced in 2012 to helping Malaysians aged 18 and over build their retirement incomecompleting the compulsory contributions (ETH).

PRS is regulated by the Securities Commission Malaysia (SC), to provide secure and supervised schemes for the public to save and invest for their retirement.

It is centrally administered by the Private pension administrator Malaysia (PPA), to provide maintenance of PRS members’ accounts, continued service and to protect their interests.

Investing in PRS is considered an easy way to save funds for retirement. For example, you can set aside 10% of your salary – as our parents illustrated above – in your PRS account so that it can potentially grow.

Those who contribute to the PRS can also obtain a personal tax relief up to RM3,000 per year.

Each PRS offers a choice of retirement funds that individuals can choose to invest based on their own retirement needs, goals and risk appetite. The fund options under the PRS are intended to improve long-term returns for members within a regulated framework.

Those interested in registering can do so with the Candy contest #ISaveinPRS 2022. This is a campaign by PPA Malaysia for new registrants to start investing in PRS with just RM100 when they register for an account through PRS online.

Image Credit: Private Pensions Administrator Malaysia

During the competition, 20 people registered for the first time receive PRS treats worth RM100 in PRS units through a monthly PRS Treats draw.

Did you know: “Units” means an investment unit which is a calculated proportionate share of the total net assets of the open-ended investment funds.

Recipients of the monthly treats will also receive a Additional Touch ‘n Go eWallet top-up PIN worth RM30 when they enter the promotional code PPA ISAVEINPRS.

Additionally, all new entrants during the contest period will qualify for the Grand PRS Treats raffle, to win grand prizes worth between RM1,000 and RM3,000 in PRS units.

As with any investment plan, you are advised to make your own investment risk assessment and seek professional advice if necessary.

  • Learn more about the #ISaveinPRS Treats 2022 contest here.
  • Read more finance-related content here.

Featured Image Credit: Quinnie/Dr Awangku/Sarah