Millennials planning from now for their sunset years
PETALING JAYA: Malaysian millennials are already planning for their golden years, with about one in every three private retirement scheme (PRS) members aged below 30. As of June 30, these financially-savvy youths made up almost 27% of the total number of PRS contributors – an increase from the 20% recorded in March. Their numbers have been steadily rising over the years too – increasing by 71% from 27,263 PRS members in March 2015 to 46,692 in March this year.
Last month, the number reached to about 67,000, or almost 27% of the total 248,325 PRS contributors nationwide, said the Private Pension Administrator Malaysia (PPA), which is the central administrator for PRS.
“These youths have a total of RM99.2mil in net asset value under such schemes as of March this year.
“This represents 6% of the total RM1.64bil in PRS savings from all age groups,” PPA chief executive officer Husaini Hussin told Sunday Star. Total net asset value stood at RM1.74bil last month.
“We are encouraged that many youths have started early to save for their retirement. We understand that it is not easy – when you have just started working, your income is not high and you probably have other financial commitments.
“But these youths are disciplined and have sacrificed some lifestyle indulgences, such as gourmet coffees or designer clothes, to put aside some savings for their retirement.
“We hope such an attitude will rub off on their peers as well,” Husaini said.
The PPA, launched together with the establishment of PRS in 2012, is a body approved by the Securities Commission Malaysia to protect PRS members’ interests and educate the public on PRS. According to Husaini, one key reason for the rise in Gen-Y PRS members was the PRS Youth Incentive introduced by the Government.
“Another key factor is the improved public awareness on retirement savings and financial literacy among Malaysians, particularly among youths,” he added.
(Generally, millennials or Generation Y refer to those aged between 20 and 35.)
Husaini said the PPA conducted a survey in October 2015 and found that the awareness level of youths stood at 40%, increasing from 30% in January of that year. “We believe the awareness level would have exceeded 40% by now, as we are actively carrying out campaigns to encourage more youths to capitalise on this incentive,” he said. In Budget 2014, the Government introduced the PRS Youth Incentive Scheme for Malaysians aged between 20 and 30. Under the incentive, such contributors will receive a RM500 boost from the Government if they save a minimum of RM1,000.
In Budget 2017, the incentive was increased from RM500 to RM1,000. On concerns among the public that PRS funds are not performing well and even recording losses, Husaini said some funds were doing well while others could be better. “We encourage members to regularly review their portfolio to keep tabs on fund performance. “You must keep in mind that with PRS, you are investing in the long term towards your retirement. “If you practise dollar cost averaging by saving in PRS regularly – meaning investing a fixed amount of money at regular intervals over a long period – you may mitigate the risks of capital market volatility,” he said. Husaini said there are 56 PRS funds managed by eight PRS providers.
Regardless of their age, he urged Malaysians to start saving for their retirement.
“The right age is now. Whether you are 18, 40 or 50, it is good to have an additional nest egg for retirement to complement your pension or Employees Provident Fund savings,” he said.
