Putting forth plan for a secure future

Balqais emphasises that it is unwise for individuals working in the private sector to rely solely on income from the fund in this economic climate as the country aspires to become a developed nation.

HOW do we support ourselves financially after our retirement? Do we lose money when we contribute to the Private Retirement Scheme (PRS)?

These were some of the questions asked at the “Plan for Your Retirement” workshop organised by Star Media Group Bhd (formerly known as Star Publications (M) Bhd).

Private Pension Administrator Malaysia (PPA) Learning Centre manager Mohamed Farith Mohamed Jamal said it was imperative to find alternate means of savings such as through the PRS.

Like any other investment scheme, Mohamed Farith said, there was a risk of losing money. However, he was quick to add that with great risk comes greater returns.

He told participants that the PRS was guaranteed as it was regulated, although the returns follow the rise and fall of the market.

Mohamed Farith said Malaysians were fond of giving excuses when advised to save for their twilight years.

“A study by Nielsen Malaysia shows 79% of Malaysians are not prepared for retirement,” he said.

Among the misconceptions individuals should avoid are that EPF is sufficient, the need to settle loans first or that there is not enough money to save for retirement.

“Youth these days say they want to enjoy themselves first or they will start tomorrow while others say ‘my children will provide for me after my retirement’,” he said.

He said statistics by the Health Ministry showed life expectancy increasing each year, with an estimation of 20 to 25 years after retirement.

“Three of the biggest retirement income issues stem from adequacy, sufficiency and sustainability.

Mohamed Farith addressing some 200 participants at the ‘Plan for Your Retirement’ workshop organised by Star Media Group.

“Right now, individuals need to have at least RM1.5mil in total for retirement savings but they also need take into account the effects of 3% to 4% inflation rate.

“That’s where the need for additional savings to complement EPF comes in, such as the voluntary PRS savings and investment schemes designed to help individuals save more for their retirement.”

Muhamed Farith said savings would be more effective through monthly automatic deduction into the PRS fund to soften the blow of payment.

“Make it a point to save regularly and, more importantly, start now,” he added.

Employees Provident Fund (EPF) Strategy Management Department head Balqais Yusoff, who also spoke at the workshop, said there was a need for individuals in the private sector to look out for other methods of retirement savings in addition to EPF.

“Statistics show that people are going to live longer and the youth have low financial literacy with no planning or protection for themselves to mitigate unforeseen events.

“Because of this, some of the realities of today include rising cost of living and increasing issues with elderly poverty because Malaysia is set to become an aged nation by 2030, when the elderly account for 14% of the population.

“While bankruptcy rates are increasing with 25,000 declared bankrupt yearly and 55 cases daily,” she said.

She also said that the job market was saturated due to evolving technologies that provide jobs, as what was taught in universities today may become obsolete tomorrow.

“Therefore, it is important not to underestimate the power of compounding, so start saving at an early age,” she added.

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