i spoke to a PRS agent and apparently i was encouraged to buy their unit trust instead. In fact i was told that it is the government that put a mandatory for these banks to set up this PRS and they had no choice but to accept the government offer.

Also the fund size according to the agent will be very small, whereby only higher income tax payers will buy and max will only be RM3k.
Imagine in reality who and how many ppl in Malaysia really pay tax? This times RM3k/year and then divided into 8 funds approved by government.
Therefore the PRS fund size is very small for each bank and also no historical proven record.

I really into this PRS as it give 26% returns every year (via income tax). on the other hand, i am worried that with PRS given at lowest priority among the other unit trust by the 8 banks, the capability of fund managers assigned by the bank may not generate any growth of money.

Any thoughts?

Thanks to all sifus for the advice as this is the first time I will invest in ut as I normally invest in equities.
Actually the prs agent is from public mutual.
I dunno how true but agent told me she makes the same commission but she prefers to invest in normal ut than prs due to what I stated earlier.
But when I explain about close to 26% yoy return (10yrs) then only she realize my intention of buy prs.

I am not sure if rm3k /yr is a lot or not when invest in ut but I am quite sure most ppl will not buy more than 3k per yr for prs. And if yr tax bracket not high, he/she may think twice or wait a few yrs first to see performance before buy. The agent says bigger fund offers more flexibility n liquidity n is better.

I read the brochure n the same fund managers manage the three funds(growth, moderate n conservative). They r liew mun hon and zaharudin ghazali. I have no idea who they r or their track record. In hong kong, there is no epf equivalent,, but employees have to contribute a certain amount thru prs n some of the funds is losing money n my counterparts there are cursing. At least here the gov is giving ard 26% "discount" depend on yr tax bracket.

So far I only consult public mutual so if others have consulted other providers do share yr thoughts of which prs to buy. Thank you.

Maybe I have confused u. Rm780/3000=26%. if the fund mgr didn't make any money, u get 26%return from the3k u invested. The question is whether the fund mgr is capable to grow or lose yr capital?

U mentioned above "to get that rm780 tax relief per year, u have to ensure you invest in a prs fund that gives you back better return" -- this is not true. Whether or not the fund perform, if u invested rm3k per year n yr tax bracket is 26%, u will get yr rm780 tax relief. Hope this explains.

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Added on December 8, 2012, 1:55 pmI call public bank but the salesperson I talked to only sell ut,not prs. And she does not want to recommend me any agent, citing she don't know. Last week I saw a public mutual roadshow, n finally I met someone who can sell prs.

In short, she is the only agent I know who sell prs. Any recommendation of good prs agent contacts for me?

This post has been edited by turbopips: Dec 8 2012, 01:55 PM

Yes u r rite. If my tax bracket is not more than 15%, I will think twice to invest in prs.
Malaysia income tax is too high n u easily hit the high bracket. Nowadays a person cannot say he is rich if he/she earn rm 120k per year. our salary increase , inflation increase even more, but the income tied to tax bracket remains.

Btw, do share with us the hwang dbs contacts if u think it's better. Thanks

I think there’s enough explanations in all the previous postings on the role of tax relief in PRS, so I need not elaborate more on the taxes, coz ultimately everyone has their logical thinking behind.

There’s no right/wrong. But for the high tax bracket person who does not agree with your statement above although he has the additional RM3k to spare, I think there could be 3 scenarios:
1. He is a bloodly good investor, and consistently make >26% returns on their investments every year. So PRS is an added risk for them
2. He is very risk averse.
3. He has enough exposure on equities

For me, even if the year is badly hit and the PRS fund manager loses >20%, I don’t think I am that good to use the RM3k to make any profits for myself in any risk investments for that year (besides FD).
And also RM3k/yr is but another diversification in portfolio to me as it will be the first UT that I am buying. 

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Added on December 10, 2012, 5:43 pmThanks for putting things into another perspective for us. Which makes me recollect what my Public mutual fund salesperson says that they (PRS fund providers) r not very keen and it’s the government that mandate certain bank/company to setup this PRS. I am not sure why but maybe fund too small? And it could be WIN-WIN situation more for both rakyat and government? My biggest worry is that the funds are not putting their top notch fund managers to manage this PRS.

Also the fund size may not be big as I think majority of the contributor will be non-bumi, higher tax bracket earners due to lesser avenue for them for bigger tax deduction. And their small RM3k contributions will be spread out in the 8 PRS providers.

This post has been edited by turbopips: Dec 10 2012, 06:00 PM

If tax relief is not yr main reason of buying PRS. I suggest its better for u to continue invest in your unit trust/gold. Why?
1. U dont want yr investment to be tied down till the age of 55 years in PRS as the capital is not guaranteed.
2. Its historical performance is unknown yet unlike the normal unit trust u buy
3. U may want to wait to see the performance of the PRS fund managers against normal UT to see if there's signifcant.

The money is yours... so this is just suggestion.

This post has been edited by turbopips: Dec 11 2012, 09:16 PM

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.

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.

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.

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
Total sales charge over 15 years = RM90 *15 = RM1350
Hwang:
Yr 1 sales charge - RM0
Annual management/trustee/ppa fee (1.88%) - RM56.40
Total management/trustee/ppa fee over 15 yrs - RM846
Total sales charge over 15 years = RM0 *15 = RM0


U for forgot about sales charge RM90 to be paid every year assuming u invest RM3k every yr.

Thanks Ko Chin for the sharing.. Very expert in Excel ah... I agree that it boild down to performance of fund ultimately.
Just curious to know, in the event the government decide to extend the tax relief up to 15 or 20 years (ie the RM3k investment continues) will PM still have a lower cost? Thanks

Yeah.. if investment continues, i think in year 19 PM will overtake Hwang in terms of cost, assuming fund performance is equal.
Probably thats the time to switch fund if one hasn't reach retirement age yet.

Hi all,
I know we can use EPF $ to buy UT. But can we use EPF $ to buy PRS too?
Thanks.