The Securities Commission (SC) has announced that it is now allowing conservative funds under the Private Retirement Schemes (PRS) to invest in foreign markets. PRS funds are also permitted to invest in exchange-traded funds based on physical gold.
Prior to this, conservative funds were allowed to invest only in local equities and fixed income securities. Additionally, PRS funds could only trade in specific investment options, namely equities; fixed income and transferable securities; cash, deposits and money market instruments; derivatives; collective investment schemes; and real estate.
According to the SC, the decision to liberalise the regulation on PRS was made to enhance the competitiveness of the industry, as well as to provide more flexibility in asset allocation.
“These liberalisation measures were adopted after a robust review process undertaken by the SC, in consultation with the industry and Private Pension Administration Malaysia, to encourage PRS members to grow their investments. Meanwhile, PRS also enables its members to access funds to ease their financial burden in times of need,” said the chairman of the Securities Commission, Datuk Syed Zaid Albar.
The SC further commented that PRS providers are required to gradually move their members to less risky core funds so as to match their age range to their risk tolerance. This is especially so given the longer lifespan of the Malaysian population.
“This will help to reduce the market risk exposure for members who opt for default funds (growth, moderate, and conservative) that are matched against their age,” said the SC. By default, those who are aged below 40 years old will be parked under growth funds, whereas those between 40 to 50 years of age are parked under moderate funds. Lastly, those who are 50 years of age and above will be placed under conservative funds.
Established in 2012, PRS is a long-term savings and investment scheme that helps Malaysians save for their retirement. As of now, there are eight PRS providers serving more than 455,000 members across the country. The industry is valued at RM3.5 billion at the end of 2019.
(Source: The Edge Markets)