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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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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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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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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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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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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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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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PRS Affordability

RM 1,000 Minimum Contribution(Within a calendar year)

ApproximatelyRM85 / month

Approximately RM3/ day

tax reliefRM500incentive

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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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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 End