(Article updated on 19 November 2025)

Malaysians cannot afford to retire with just their EPF savings alone. With retirement planning remaining a pressing concern, recent data reveals troubling trends about Malaysians’ retirement readiness. As of October 2024, only 36% of active formal EPF members meet the existing Basic Savings level according to age, anchored on RM240,000 at age 55. Meanwhile, EPF has introduced new retirement adequacy benchmarks, recommending at least RM390,000 by 2028 for basic retirement needs, RM650,000 for adequate retirement, and RM1.3 million for enhanced retirement security.

Our 2025 RinggitPlus Malaysian Financial Literacy Survey (RMFLS) found that while 55% of Malaysians below RM2,000 income have started planning for retirement (up from 48% in 2024), 47% of Malaysians overall still live paycheck to paycheck. These statistics underscore the urgent need for additional retirement savings beyond EPF.

This retirement savings gap isn’t new. Recognising this challenge over a decade ago, the government introduced the Private Retirement Scheme (PRS) in 2012 to encourage Malaysians to build their retirement income beyond EPF. If you’ve been thinking of contributing, here’s what you need to know about PRS.

What Is The Private Retirement Scheme (PRS)?

The PRS is a defined contribution pension scheme which allows people to voluntarily contribute into an investment vehicle for the purposes of building up their retirement fund. This is especially useful for those who wish to grow their retirement fund and invest but aren’t savvy in the area of investment.

However, don’t mistake this as a substitute for the EPF scheme. The PRS complements the EPF, offering individuals the ability to build another fund that they can tap into when they retire, rather than relying on EPF alone.

On top of that, having a voluntary scheme in addition to the EPF allows private company employees and self-employed persons to voluntarily diversify their contributions towards their retirement.

EPF vs PRS

While EPF forms the foundation of most Malaysians’ retirement savings, PRS gives you additional control and flexibility:

With EPF, you get:

• Mandatory contributions (fixed percentages)
• Government-guaranteed minimum 2.5% dividend
• Limited choice in how funds are invested

With PRS, you get:

• Voluntary contributions (any amount, anytime)
• Potential for higher returns based on fund performance
• Full control to choose providers, funds, and risk levels
• Additional RM3,000 tax relief on top of EPF benefits

Think of it this way: EPF is your safety net, PRS is your opportunity to build more.

PRS Providers

PRS fund managers – collectively known as PRS providers – are required to be approved by the Securities Commission, and all PRS activities are administered by the Private Pension Administrator Malaysia (PPA). The PPA is a body approved by the Securities Commission, and serves to protect PRS members’ interests and educate the public on PRS.

Currently, there are nine approved PRS providers you can choose from:

• AHAM Asset Management Berhad (formerly Affin Hwang Asset Management Berhad)
• AIA Pension and Asset Management Sdn. Bhd
• AmFunds Management Berhad
• Hong Leong Asset Management Berhad
• Kenanga Investors Berhad
• Manulife Investment Management (M) Berhad
• Principal Asset Management Berhad
• Public Mutual Berhad
• RHB Asset Management Berhad

You can invest in PRS funds through these providers directly at their branches or websites. Alternatively, you can use digital investment platforms like FSMOne or Versa, which allow you to compare and invest in PRS funds from multiple providers in one place, often with benefits like zero sales charges and easier fund comparison tools.

PRS Contributions

Unlike the EPF system, you’re free to invest any amount, whenever you please. That means there’s no pressure to allocate a part of your salary each month at a fixed rate. It largely depends on how much you are willing to invest. The minimum initial investment typically starts at RM100, making it accessible for most Malaysians. If you’re unsure of how much to contribute, the PPA retirement calculator can help you estimate how much you need to save to reach your retirement goals.

Are PRS Investments Safe?

There is no such thing as risk-free investment. However, the PRS enables you to customise your investment choices based on your risk appetite but be aware that this will affect your expected return. Like other investments, PIDM does not cover PRS investments, and if the fund you invest in does not perform well, you could end up with less than what you saved initially.

Therefore, PRS providers are required by the Securities Commission to provide at least three “core” PRS funds, each with varying risk levels. Depending on your age or risk appetite, you can choose between Conservative, Moderate, and Growth funds.

The good news is you’re not locked into one choice forever. You can invest in funds from multiple PRS providers if you want to diversify further. Switching between funds under the same provider can typically be done anytime, though it’s best to check your provider’s disclosure document for specific terms. If you want to transfer to a different PRS provider altogether, you can do so once a year (after the first year from your initial contribution), though transfer fees may apply.

Some PRS funds also offer an automatic rebalancing feature called the glide path, particularly in Target Date Funds. These funds automatically adjust from aggressive to conservative investments as you get closer to retirement, so you don’t have to actively manage your portfolio.

To fully reap the benefits of PRS, it appears that some amount of market know-how will be beneficial as you will be able to actively decide which fund to contribute to and when. You will also be in a better position to know when to pull out of non-performing investments.

PRS Income Tax Relief

One of the biggest draws of PRS is the tax benefit. You can deduct up to RM3,000 from your taxable income annually, which reduces your final tax payable. Earnings generated by the PRS funds are also exempted from tax charges, including Foreign Source Income (FSI) tax.

This tax relief has been extended until the year of assessment 2030 (announced in Budget 2025), giving you plenty of time to take advantage of this incentive. Depending on your tax bracket, this RM3,000 contribution could result in tax savings of up to RM840 per year. 

PRS Withdrawals

Your PRS contributions are automatically split 70:30 between two sub-accounts:

• Sub-Account A (70%): Can only be withdrawn at retirement age (55 years old), upon death, or if you permanently leave Malaysia
• Sub-Account B (30%): Allows one pre-retirement withdrawal per year, but you’ll face an 8% tax penalty unless it’s for housing or healthcare purposes

Once you reach 55, you can withdraw from both accounts without penalties.

How Do I Start Contributing To A PRS Fund?

To get started, you will need to set up a PPA account from the PPA website (note that there’s a one-time RM10 account opening fee). From there, you can contribute to any of the PRS funds of your choice via PRS Online on the PPA website. Of course, you can also do these at any PRS provider’s branch.

Many PRS providers now also offer digital platforms and mobile apps, making it even more convenient to open and manage your PRS account online. 

Can Employers Make Voluntary PRS Contributions For Their Employees?

Sure they can. In fact it works well for both employers and employees. Employers can invest in a PRS fund as a private pension for their employees together with recruitment benefits like Medical Insurance – a great way to attract loyal employees. On top of that, employers will also receive tax exemption for contributions for up to 19% of an employee’s base salary.

Should You Start Contributing To PRS?

If you’re already contributing to EPF but worried it won’t be enough, PRS could be your answer. Here’s when PRS makes sense:

You should consider PRS if:

• You want to save more than what EPF provides
• You’re self-employed or a freelancer with irregular EPF contributions
• You have extra income and want to reduce your taxable income
• You’re comfortable with some investment risk for potentially higher returns
• You want more control over how your retirement funds are invested

Start Small, Build Gradually 

You don’t need thousands of ringgit to begin. With a minimum of RM100, you can open a PRS account and start building that second retirement fund. As your income grows, increase your contributions to maximise the RM3,000 annual tax relief.

The key is to start now. With the tax relief extended until 2030 and retirement benchmarks rising (RM650,000 for adequate retirement according to EPF’s new framework), every year you delay is a missed opportunity to grow your retirement savings.

Ready to get started? Visit the PPA website to open your account. 

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