Retiring well financially

  • Business
  • Saturday, 07 Sep 2013

CONSUMERS will be watching their spending more following the recent petrol price hike, but Private Pension Administrator (PPA) chairman Datuk Zaiton Mohd Hassan says that no matter what the economic situation may be, it is important to continue setting aside savings for retirement.

“When it comes to retirement planning, time is money. As private retirement schemes (PRS) is a long-term investment scheme, the investments in PRS will be able to ride out market fluctuations in the long run,” she tells StarBizWeek.

“In fact, in a rising inflation environment, one should pay more attention to ensure that their retirement savings don’t get eroded by inflation.”

The idea of retiring financially well is in the minds of Malaysians, and a recent survey by PPA confirms this. Whether they are in their 20s or 50s, they generally understand the importance and the urgent need to plan and save adequately for their retirement. They are also aware that they cannot rely solely on EPF savings.

This is also evident with more than 36,000 PRS contributors, some of whom have PRS contributions with multiple PRS providers. The total assets under management (AUM) for PRS currently stands at some RM123mil.

“While that is the case, many people cite various barriers that distract them from saving for their retirement such as not earning enough, having limited cash flow, paying off personal and family financial obligations as well as planning for children’s education. Malaysians are also aware there are investment products in the market that are catered for retirement planning,” she says.

The nation’s central administrator for voluntary PRS launched a nationwide advertising and promotion (A&P) campaign recently aimed at raising the level of awareness for PRS among the general public and boosting participation in the third-pillar of the nation’s multi-pillar pension framework.

“Although the number of PRS contributors is increasing steadily and healthily in the last few months, the public lacks the understanding to differentiate some of these products and their benefits. Private retirement scheme is term which some members of the public have confused with the generic retirement products already available in the market,” she says.

To differentiate themselves, PRS need to have their own distinct brand to stand out from the other investment vehicles in the market, be it deferred annuity or insurance products.

The PRS brand which PPA has developed consists of a PRS logo, tagline (Save. Invest. Retire. Enjoy.) and a mascot in the form of a parrot named Si-Re (acronym of the tagline).

Explaining the rationale, Zaiton says: “The logo is unmistakeably PRS, as the pillar in the logo signifies PRS as the main component of the third pillar of Malaysia’s pension framework. The ring forms a platform below the letters PRS represents the robust framework of the PRS, while the continuity between the letter R and S explains the system of long-term investment for PRS – from working life to life after retirement. The colour red is used to denote a sense of urgency.”

The PPA, together with all eight PRS providers, contributed towards a RM5mil Industry Development Fund (IDF) for the PRS A&P campaign. The IDF is a three-year commitment by PPA and the PRS providers to raise awareness for PRS. PPA hopes to achieve an awareness level of 25% of the Malaysian working population within two years.

Asked the current level of awareness, she says: “It is difficult to ascertain the awareness level at the moment as it is still new. Whatever the awareness level may be, PPA is committed to creating the presence for PRS. We do plan to conduct an awareness survey later part of this year. The PPA will then be able to share with the media the awareness level for PRS.”

The eight PRS providers that contributed towards the IDF are AIA Pension and Asset Management Sdn Bhd, AmInvestment Management Sdn Bhd, CIMB-Principal Asset Management Bhd, Hwang Investment Management Bhd, Kenanga Investors Bhd, Manulife Asset Management Services Bhd, Public Mutual Bhd and RHB Investment Management Sdn Bhd.

As the PRS is still new (launched in July 18 last year), Zaiton says one of the challenges faced by the PRS industry lies in creating greater awareness for PRS and educating the public on the importance of retirement planning.

“The industry’s objective is to reach out and penetrate to the entire working population in Malaysia. Like the analogy goes, we would like to educate the public how to fish rather than giving them the fish. The public needs to be educated not on just PRS alone but also topics such as basic principles of financial planning and the benefits of regular saving,” she says.

As creating awareness and education is only part of the first phase of promoting PRS to the public, Zaiton adds that with the necessary information, the public will gain confidence in PRS and make informed decisions when contributing.

“It is a step by step process to change Malaysians’ mindset and inculcate in them a habit of setting aside current savings for future spending,” she says.

To further promote awareness, recognition and recall, a mascot is introduced. PRS is represented by a parrot as it can spread its wings to fly, denoting financial freedom during retirement.

According to Zaiton, the parrot is also a vibrant and intelligent animal which signifies PRS as a vibrant industry which provides the options of providers and funds to choose from and helps consumers make smart decisions in retirement planning.

“we want to set the tone that PRS gives hope and everyone deserves to enjoy their retirement,” she says.

As retirement is a certainty for every individual, Zaiton says the PRS A&P campaign strategy is designed to reach all segments of society in Malaysia across all races, ages and genders.

“The PRS advertisements will appear in three languages (Bahasa Malaysia, English and Chinese) in media that will allow PRS messages to be transmitted to all corners of the country. As such, TV (free-to-air and pay TV), radio, print, online as well as billboards are used to reach the target audience,” she says.

In conjunction with the PRS A&P campaign launch, PPA has also revamped its website to support the A&P campaign in anticipation of increasing enquiries from the public and demanding more sophisticated and in-depth information about the PRS. The new website also includes new features such as a PRS Providers page, education page, retirement calculator and fund performance tool.

In addition, Zaiton says PPA continues to keep the public up to date on PRS information and education through media coverage and reach out at roadshows, conferences and seminars, as well as providing PRS talks and presentation to corporate employers.

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