Biggest advantage of PRS = zero sales charge. Can still withdraw..... Just pay 8% penalty to LHDN only.

Once I attended Yap Ming Hui's seminar and he said look at your bank account and other saving vehicle.... Which one has the most money in it?

He said it is KWSP isn't it? Most of the participants said yes. Yap said why is it the biggest chunk? Because you can not get it out.... Hence it is by far the biggest saving you'll ever have. He said human nature makes us very vulnerable to want to withdraw the money and spend it.... It is just human nature.

Xuzen

I don't think you need to redeem 100% of the balance in the UT at the same time.
If when retire the UT register a huge loss, then :
i) don't redeem any. Wait for the UT to rebound, then only redeem. Or,
ii) redeem bit by bit while waiting for the UT to rebound. Hopefully the unredeemed balance will recover in value.
However, if you're investment savvy then you could redeem all and invest into assets with higher and faster potential to recover.

i) given enough time, then it is likely to rebound. Unless it's Bernie Maddoff fund.
ii) Not looking to contribute 20-30 years. I'm only going to contribute for 10 years. After that, not contribute anymore because no more tax relief. Investing in UT require a very long time Horizon. 15 years or more.
And between UT and ETF, I'd rather invest in ETF. It's just that Government only give tax relief for investing in PRS, and the PRS buy only UT.

i) A fund does not need to rebound back to your original entry price for you to make a profit. When the fund falls 50%, then you buy more ... to lower your average purchase price. But do this only if you believe the underlying fundamental of the fund will recover.
ii) Very few people can consistently earn 20+ percent return. However, when a person invests in PRS, he gets a tax relief. And for people in the high tax bracket, this kind of "return" is considered high return. And the investor can get this high return for not only 1 year, but 10 years.
Your analogy of whether buying equities directly is considered "retirement fund" or not, I think it depends on the reason you buy the fund in the first place.
If you buy equities because you enjoy the thrill of speculation, then I consider it a "gambling or entertainment fund".
If you buy equities because you want to get the dividend to replace employment income, then I consider it a "retirement fund".