In efforts to encourage Malaysians to have better financial security after their retirement, Principal Malaysia has launched the Principal RetireEasy funds under the first-of-its-kind end-to-end retirement solution in Malaysia. The investment firm’s new fund aims to provide investors with simple hassle-free retirement planning from when they start work till their retirement.
These Funds, Principal said are managed toward a particular target date year based on when the investor is expected to start withdrawing money from the portfolio to support their retirement needs.
It is reported that working individuals in the private sector contribute to the mandatory retirement savings, yet, according to Employees Provident Fund, the country’s statutory body that manages the retirement savings for private sector and non-pensionable employees, 6.1 million of their members have less than RM10,000 in their accounts. During the pandemic, the government allowed contributors to withdraw from their EPF savings which resulted in members depleting their savings to the extent that it might be difficult to rebuild sufficient assistance.
“The numbers show the increasing percentage of members not meeting the EPF basic savings threshold of RM240,000, which is the minimum amount members should have when they reach age 55 in order to have a decent retirement,” said Munirah Khairuddin, chief executive officer and country head of Principal Malaysia, “As Malaysia eases into the next phase of the endemic, Principal is committed to helping Malaysians rebuild their retirement savings and feel more financially secure through our latest solution.”
The Principal PRS end-to-end retirement solution caters to both the accumulation and decumulation phases. The RetireEasy Target Date Funds (TDF) under the accumulation phase are funds managed towards a particular target date, which matches to investor’s year of retirement. The TDF invests in different types of investments, and the mix changes over time. The investment manager in charge of each fund uses the target retirement date as a guidepost and periodically adjusts the diversification and risk profile to ensure the mix is helping to meet investors’ long term needs. They’ll also rebalance as necessary to maintain the preferred investment mix. The investment in the process is supported by Principal’s global expertise in retirement planning, and asset allocation, managed by an experienced global team.
Munirah added, “TDF is managed toward a particular target date – becoming more conservative near retirement. Generally, the further you are from retirement, the more risk you may be comfortable taking. The RetireEasy TDF investments reflect that, with generally a greater proportion of more conservative investments and fewer aggressive investments over time. As investors age, the RetireEasy TDF progresses with them, without investors having to make adjustments, making them a good option for helping to navigate volatile market environments.”
When the RetireEasy TDF matures, investors will be moved automatically into one of the RetireEasy Income funds to begin the decumulation journey. Investors may customise a scheduled withdrawal based on their needs and continue to grow the remaining fund balances to increase sustainability.
The RetireEasy funds are available in both conventional and Shariah-compliant options. The solution also maintains one of the key benefits of the PRS investment with a tax incentive of up to RM3,000² per year for individuals. Structurally, PRS serves as a complement to the EPF, while providing the potential of helping roughly two million self-employed Malaysians amid the growing gig economy.
