Has anybody received their contribution statement from the Private Pension Administrator (PPA) for the year 2012 yet?
I would like to submit my e-filing ASAP to get my tax refund. I wonder if I really need to wait until I receive the statement from PPA before I submit.

Edit:
Just read this from the PPA website.
"Members are to note that notification issued by Providers on contributions made upon creation of units or other statements issued by Providers on contributions made, can be kept as evidence for tax relief purposes."

So meaning the contribution advice from my CIMB is the evidence.

This post has been edited by simplesmile: Mar 1 2013, 07:59 AM

I am contemplating whether to add my tax savings into the PRS on top of the RM3,000 I'm investing annually.

The reason why I'm thinking of adding the tax savings to the PRS is so that I can also see my tax savings grow. The reason why I invest in PRS is because of the tax savings. And what better way to put my tax savings to work than adding it into PRS? Then 10 years later, I can look at my total PRS fund value, less the RM30,000 invested and the balance is the gain. Yes, I treat the tax savings as a gain instead of principal invested.

However, the tax savings I add would not qualify me to additional tax relief. Hence there's no benefit from tax relief point of view. Would I be better off putting this tax savings into my mortgage account to reduce the mortgage interest instead? Should I keep the tax savings to increase my liquidity?

I'm having a dilemma here. How about you guys and ladies? What do you plan to do with your tax savings?

Why do you say GE pays back for 9 years? Isn't 61 to 70 = 10 payments in total? And if each payment is RM4,012.5 then total 10 payments = RM40,125?
Anyway, even with 10 years of payback, the Net Present Value analysis is negative. This is before factoring any tax relief. You will have to do your own NPV analysis by factoring your individual tax savings to see if it's worth investing in this annuity.

This post has been edited by simplesmile: Mar 23 2013, 11:23 AM

If the payback is only 9 years, then with the tax savings you get a positive NPV. However, in my opinion the NPV is too small for a 19 year investment.
Also, the NPV reduces when the interest rate rises, while the NPV increases when the interest rate falls.

You might do better by investing in Conservative PRS funds.

Does anybody know how I can upload a .ods/.xls/.xlsx file? LYN seem to tell me that "Upload failed. You are not permitted to upload a file with that file extension."

Here's the attachment of the .xls and .ods file. They are the same except with different extensions.
Anyway, you can try to change the numbers and see the change in NPV. This is just a simple analysis assuming same tax savings (will the highest tax bracket reduce in future?), same interest rate (will interest rate rise and fall in these 19 years?)
Also, like you stated earlier, if you started late then you would not be able to enjoy the 10 years tax savings, so you can also remove some tax savings and see the impact on NPV.




Thanks for letting me know.

This post has been edited by simplesmile: Mar 24 2013, 02:37 PM


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Yes. Because the discount factor uses the FD interest rate, so if you get a positive NPV it means that this investment is better than FD.

If the interest rate rises, will the Annuity given by GE also increase? If not, then you can change the interest rate and see that when interest rate rises, the NPV falls, making the GE investment less attractive. If the interest rate falls, then the NPV rises, making the Annuity more valuable.

The assumption is RM780 tax savings per year. In reality will the highest tax bracket remain at 26%? Will the tax rate be reduced in the coming 9 years? If yes, then the tax savings will be less. This will result in a lower NPV, making the GE investment less attractive.


The PRS conservative funds might perform better than FD because part of the money is used to invest in stocks. I am unable to recommend any particular PRS provider because Unit Trust is not my expertise.


Unit Trust is not guaranteed. Lets assume the stock market crashes and hence the Unit Trust price falls in the year you are eligible to redeem your investment. If you redeem the investment then definitely you will be redeeming at a lower price. But if you can wait several years until the stock market recovers, then your Unit Trust price will also recover. If at that time only you redeem, then you will be redeeming at a higher price. You will need to judge whether you have the financial strength to hold your position or not.

The GE investment provides you with cashflows for 9 years, whereas the PRS UT if you redeem before you reach retirement age then you will get a penalty of 8% of the redeemed amount. If you withdraw after reaching retirement age, then no penalty.

In the GE investment, is it compulsory to invest the RM3,000 every year for 10 years? Can you stop investing in Year 7, and then continue again in Year 8? In PRS, you have the flexibility to stop investing and continue again the following year.

These are some of the factors to consider. I suggest you discuss with an independent qualified financial planner who can help you assess your options.

I don't invest in Public PRS so I don't know if it's performing or not. But I just want to highlight one thing that a lot of people mistake is they just look at the NAV price they buy and the current NAV price. This is not correct. We need to look at the total value of the fund (ie. total units multiple NAV). This is because some funds distribute units as dividend. And after the distribution we will have more units, but the NAV will drop. But overall, if you take total units multiple by NAV, you'll reach the same value before and after distribution.

So, even though the current NAV is the same as the NAV you buy, but if you have more units then the total value of your fund has gained. Your investment has gained.

OK. The PRS fund that you have chosen is not performing.
Then I must be lucky because my PRS fund has gained more than 10% since I started to invest at end of last year.

This post has been edited by simplesmile: Jun 4 2013, 02:29 PM

I forgot to add that even though the value of your investment might not have increased however, don't forget about your tax relief. If your tax bracket is 19%, then for every new dollar you put into the PRS, you already get 19% return. Thinking this way, your PRS already gave you back some return.

I think you mean age 60, right?

With pressure from the financial industry (especially UT industry because they want to keep your fund longer so they can earn another 5 years management fee), I am sure the withdrawal age will change in several years time.

I hate this government. Always excluding my age group when have goodies.

So....how does the PPA take RM8 from our PPA account?

I invested in this fund since 2012 and the only one I've invested with so far. The reason I chose this fund over all the other PRS funds is because this fund not limited to investing in Malaysia. My thinking at that time was, "My money in EPF already invested in Malaysia equities. So I want my PRS to invest in equities outside of Malaysia, for diversification purpose." I'm happy and grateful this fund is doing so well.