What is PRS (Private Retirement Scheme)?

The Private Retirement Scheme (PRS) is a voluntary, long-term retirement savings and investment scheme introduced by the Malaysian Government to complement EPF (Employees Provident Fund). PRS is designed to help individuals build additional retirement income beyond EPF, especially as living costs and life expectancy continue to rise.

PRS was officially introduced in 2012 and is regulated by the Securities Commission Malaysia (SC).

Why PRS Was Introduced

While EPF remains the main retirement pillar for most Malaysians, many people may still face a retirement gap due to:

• Rising medical and living costs

• Career breaks or self-employment

• Insufficient EPF savings

PRS provides an additional, flexible way to strengthen retirement planning.

Key Features of PRS

1️⃣ Voluntary Contributions

PRS is entirely voluntary.

• You choose how much to contribute

• You choose when to contribute

• Suitable for employees, self‑employed individuals, business owners, and even non‑working spouses

There is no fixed monthly commitment.

2️⃣ Tax Relief up to RM3,000 per Year

One of the biggest advantages of PRS is tax efficiency.

• PRS contributions are eligible for personal income tax relief

• Maximum tax relief: RM3,000 per year

• This is separate from EPF tax relief

This means you can save for retirement while reducing your taxable income.

3️⃣ Two Sub‑Accounts (Similar to EPF)

PRS contributions are split into two accounts, similar in concept to EPF:

• Account A – 70%Locked-in for retirement purposes

• Account B – 30%Flexible portion with conditional withdrawal

This structure encourages long-term retirement discipline while still allowing limited access if needed.

4️⃣ Withdrawal Rules (EPF‑Like Structure)

PRS generally follows EPF-style retirement rules.

• Retirement age: 60 (official retirement age as of 2020)

• Account A: Withdrawable only at retirement or under specific conditions

• Account B: Can be withdrawn earlier

⚠️ Important: If you withdraw from Account B before retirement, an 8% tax penalty will be imposed on the withdrawal amount.

This penalty is designed to discourage premature withdrawals and preserve retirement savings.

Who Can Invest in PRS?

PRS is suitable for:

• Working professionals

• Self-employed individuals

• Business owners

• Freelancers

• Anyone looking to supplement EPF

You do not need to have EPF to open a PRS account.

PRS Providers in Malaysia

PRS is offered only by licensed PRS Providers approved by the Securities Commission Malaysia.

Currently, there are 8 licensed PRS providers in Malaysia offering a variety of PRS funds with different risk profiles and investment strategies.

This ensures:

• Regulatory protection

• Professional fund management

• Transparency and governance

PRS vs EPF (Quick Comparison)

Feature	PRS	EPF
Mandatory	❌ No (Voluntary)	✅ Yes (for employees)
Tax Relief	✅ Up to RM3,000	✅ Yes
Investment Choice	✅ Multiple funds	❌ Limited
Flexibility	✅ Higher	❌ Lower
Purpose	Supplement EPF	Core retirement fund
Nominee	✅ Yes	✅ Yes

Final Thoughts

PRS is not meant to replace EPF, but to strengthen your overall retirement strategy.

For individuals who:

• Want more control over their retirement investments

• Are self-employed or have irregular income

• Wish to optimize tax savings

PRS can be a powerful long-term planning tool when used correctly.

At NexGen Financials, we believe retirement planning is about dignity, confidence, and long-term security — not just products.

If you would like to understand whether PRS fits into your personal financial plan, feel free to reach out for a need‑based discussion.