By the way, why CIMB Principal have Class A and Class C? I see Class C has lower sales charge but only 0.1% higher management fee. Is it up to individual to choose between Class A and Class C?

The annual management fee difference is marginal. U should consider which fund u think will bring better returns. Considering all equal n management fee is yr sole concern, then u should buy hwang in the first year, then switch to another fund with lower fees, eg public mutual in year two. With this u only pay rm25 extra transfer fee but u have saved much more in entrance fees.

But, if I buy Hwang IM in first year, and when I "transfer" to PM second year, besides being charged the RM25 transfer fee, wouldn't I also be charged 3% by PM for buying into their scheme?

Yes, depends on whether you want lower sales charge or lower management fee.

this is exactly what i thought as well... if you transfer to PM, you have to pay RM25 to Hwang AND also RM25 to PPA. That makes it RM50. Plus the 3% by PM as new funds to them.

think if getting this just because of the income tax relief, it's not much invested max is RM30k only over 10 years (and take away your tax portion, it's probably effectively lesser than RM30k).

i was thinking of hwang initially but thought a bit more, and thinking in decades time frame, i'll probably go for PM now since they have a good track record with other funds.

Thanks for clarifying. I would like to ask if the management fee is charge based on the amount of fresh money invested in that year or based on the total amount? Example, based on 3k for yr 10 or 30k for yr 10? Thanks.

The management fee is charged on fund's Net Asset Value(NAV), which will be the total portfolio. So in year 10 will be 30k assuming no gain/loss/charges.

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Added on December 18, 2012, 11:39 pmRegardless of which provider you choose, start investing in PRS is already a good initiative as you enjoy the tax relief. Even if your tax bracket is only 7%, but isn't 7% already considered high? If you are worried about losing money, go for conservative funds to lower your risk.

Comparing EPF to PRS is like comparing an apple to an orange. There are 2 features of EPF that differentiate it with other investments: 1) Capital Guaranteed
2) Guaranteed minimum 2.5% dividend. PRS is complement to EPF by giving public a chance of gaining higher return for their retirement funds. It's more like unit trust which apply EPF system.



This post has been edited by Fat3Twister: Dec 18 2012, 11:39 PM

Yup, so for simplicity sake let's assume we only put in rm3k one time.

Up front charge is rm90 for pm, rm0 for hwang.

Let's say both appreciate in same manner and assume after 10 yrs, the value is now rm6k.

Total annual fee for pm is 1.6% or rm96 while for hwang it will be 1.88% or rm112.80 - difference of rm16.80.

Factor in year 2-9, assuming very conservative returns of about 7% pa and i think we'll see pm's lower management fee being an advantage over hwang's zero sales charge up front.

Of course all these will mean nothing if hwang can somehow return high than pm, then the zero sales and higher management fee will be a good thing.

Now time to polish my crystal ball.....

Taken fr PPA:

1. Withdrawals from PRS or from any funds under PRS may be made in part or in full after the day the member reaches retirement age, which is currently 55;

2. While pre-retirement withdrawal may be made for any reason, a tax penalty of 8% on the withdrawal amount will be deducted by the PRS Providers before the balance is credited to the member’s account.

My question is:
If next year they change retirement age to 60 then any withdrawal btw age 55 to 60 will be consider as pre-retirement withdrawal and incur a 8% penalty?

This post has been edited by Fat3Twister: Dec 19 2012, 09:48 AM

Already gazetted will starts 1-July-2013.

"The Minimum Retirement Age Act 2012 stipulates that the minimum retirement age for the private sector is 60 and employers cannot force the employee to retire before reaching that age. The Act was passed by parliament on July 17 and gazetted on Aug 16 this year"

This post has been edited by MGM: Dec 19 2012, 10:43 AM

Due to the event "Planning Towards Golden Years 2012" has been postponed from 28-30/12 to 1-3/3/2013, our firm, VKA Wealth Planners is going to conduct a seminar on the Private Retirement Scheme(PRS).

You will be exposed to what PRS is and we will introduce various funds from various providers available in the market. As to date, there are 4 providers who have launched their funds, namely Public Mutual, HwangIM, Manulife & CIMB-Principal Aseet Management.

Details of the seminar:-

Date : 23/12/2012 (Sunday)
Time : 2.30pm
Venue : VKA, IOI Boulevard (Subject to change if we have more than 100 participants)
Speaker : Mr. Javern Lim, MD of VKA Wealth Planners

Mr Javern Lim is a PRS trainer approved by SC. He has conducted many PRS Familiarisation Programme and also was the speaker for China Press's seminar on PRS on 15/12/12 and also the invited speaker for Mines's event- "Planning Towards Golden Years".


Should you interested to find out more, please contact me. Thanks.

have yet to get an agent from PM.
a buddy of mine whom i have interest to buy from have not obtained his 'license' to sell PRS yet.

when is the last date for submission to qualify for the tax relief?

any sweet young and smoking hot female agent that can assist poor old me?

Yoda says, "Emo is bad for investment.

Make bad decision one will, when smoking hot female agent assist, yes?"

Xuzen

smoking hot female agent will when you tell her you want to invest only RM3000...

Aside from the differences between PRS and EPF in earlier posts, the timing of 'investments' in EPF is quite irrelevant. EPF is comparable to a fixed price unit trust fund like ASB, where the price is fixed; and the dividend paid for the past year is pro-rata to the date you 'buy' in.

PRS will be similar to unit trusts with fluctuating prices. All the management and trustee fees will have been priced into the price. (Management fee should not be a major consideration except in comparing different PRS and their performances.) Dividend paid will be converted into more units; and which in turn will lower the unit price. Thus the actual rate of returns is depended on the price you have had 'invested' in and the price when you make a withdrawal.

Another major difference from EPF and any other fixed price unit trust fund is how they are mandated.

A fluctuating price unit trust is usually mandated to have at least some percentage in equities, with the rest in bonds, fixed deposits, etc. They cannot lock in any gains and exit completely from the equity market.

A worst case scenario: the next 10 years could be a “golden decade” followed by a decade of decline in the economy and stock market... you could be buying in at the peak prices and making withdrawals for retirement when the prices is at or near the bottom.

This post has been edited by j.passing.by: Dec 19 2012, 03:31 PM

will invest rm3k in prs, and invest other sum in other funds.

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Added on December 19, 2012, 3:42 pmyoda gives excellent advise.


This post has been edited by kochin: Dec 19 2012, 03:42 PM

So we still need to monitor the investments in PRS, right? When we think it's heading down south, then we should switch it to conservative funds to preserve the earnings instead of letting it go down.

I also read in the PM disclosure doc, if the fund type is default - then the funds will be switched when entering the next age group, e.g.

http://www.publicmutual.com.my/LinkClick.a...QU%3d&tabid=496

(a) Default option:
Your contribution under the default option will be automatically allocated
to the core fund that corresponds to the age group as specified below:

Core Fund Age Group*
Public Mutual PRS Growth Fund Age below 40
Public Mutual PRS Moderate Fund Age 40 to below 50
Public Mutual PRS Conservative Fund Age 50 and above

* This age group may be subject to changes as determined by the relevant
authorities from time to time.
Unless otherwise instructed, your contribution will be automatically
switched (without charge) into the relevant core fund, before the end of
the next calendar month from the day you attain the age as specified in
the table above.

(b) Non-default option:
Under the non-default option, you can actively select one or more core
funds regardless of your age.

So I think we as investors need to constantly monitor the fund performance as well, not just leave it there and expect a lump sum upon retirement.

I just spoke to Hwang salesperson. Althought the annual management fee is 0.3% higher, we saved on the RM90 sales charge every year. So in 10 years, its RM900 savings in sales charge compared to PM. In year 10 assuming yr fund size increase by 10%, hence RM30k*10% = RM33k.
The management fee difference (for yr 10) is only RM33k*0.3 = RM99. But u have saved RM900 over the 10 yrs..

Initially i thought the 3% is only charge 1 time only but apparently its charge every time there is fresh funds invested into the account.

So i guess the most important is still the fund performance.
Feel free to advise if my assumption is wrong.

Yes, it's charged everytime you invest. The assumption below is correct, but not complete picture. You forgot about annual management/trustee fees, and calculation below is just for yr 10. What about for Yr 2-9? Every year, HwangIM will charge you 0.28% higher than PM and it's cumulative, not just one time.

Example, if you look at 15 yrs, the zero sales charge is wiped out by the management fee over same duration. Simple scenario:

RM3000 contributed today, for 15 yrs (assume age 40 now).

PM:
Yr 1 sales charge - RM90
Annual management/trustee/ppa fee (1.60% of RM2910 cause RM90 reduced under sales charge) - RM46.56
Total management/trustee/ppa fee over 15 yrs - RM698.40

Hwang:
Yr 1 sales charge - RM0
Annual management/trustee/ppa fee (1.88%) - RM56.40
Total management/trustee/ppa fee over 15 yrs - RM846

You can see that assuming the investments never increase much, for HwangIM we are already paying RM147.60 MORE than PM, which is more than the initial RM90 sales charge.

Throw in increasing value, and let's say even longer timeframe to retirement e.g. 30 yrs old now, then the difference is even more. Of course here we are not talking about switching, but if you switch across providers you need to pay some more RM50 each time.

But honestly, I think it really doesn't matter much. Choose the provider you feel most comfortable with, no one can predict the future and we won't know whether PM will outperform Hwang or the other way round. All these are just too detailed and complicated, making the choice so difficult.

Whatever it is, if you take this because of the tax relief, your gains are already realized the day you submit income tax return next Mar/April