PRS Youth Incentive

Youths age 30 and below until 2018 qualify for a PRS Youth Incentive. Here are details of the incentive and what are the requirements to qualify.

Updated: Feb 20, 2018

What is PRS?

PRS is short for Private Retirement Schemes launched in 2012 as a voluntary long-term investment scheme designed to help individuals accumulate savings for retirement.

PRS Youth Incentive

From 2014-2016, the government contributed RM500 into the PRS accounts of youths, who have accumulated RM1,000 within a year.

In 2017, the incentive has been increased to RM1,000 for those who contribute at least RM1,000 in a single PRS fund from 2017-2018.

Applicable only for Malaysian youth aged between 20-30 years old (based on birth date as long as you haven’t turned 31) with min RM1000 contribution to approved PRS.

The youth incentive is applicable once only anytime from 2014-2018.

This means that if you have received the RM500 PRS incentive previously, you will not be eligible for the new improved RM1,000 youth incentive. 🙁

 

Other Benefit: RM3000 Tax Relief

As long as you pay individual taxes, there is a tax relief of up to RM3000 for investing in a PRS.

Applicable from 10 years from 2012-2021 only.

If you qualify for both, you enjoy both the youth incentive and tax relief.

 

Withdrawals

As it is a retirement scheme, restrictions are put into place for withdrawal.

You can only withdraw under the following circumstances.

  • After the day the member reaches the retirement age, withdrawals may be made in part or in full;
  • Following the death of a member, only full withdrawals may be made;
  • Prior to the member reaching the retirement age, withdrawals from sub-account B may be made in part or in full;
  • Permanent departure of a member from Malaysia, only full withdrawals may be made.

Note: 70% invested in sub-account A; 30% invested in sub-account B

 

Investing in PRS

There are a number of PRS providers available OR you can purchase from an online brokerage like FundSupermart.

Funds are divided (by government directive) to conservative, moderate & growth – with supposedly conservative being the lowest risk & growth the highest risk.

Sales charges depends on the provider selling (as low as 0% sales charge). There are however annual management charges (~1-1.5%) & trustee fees (~0.01-0.05%) which are hidden as directly factored into the pricing.

Should You invest in PRS?

If you qualify for the RM1,000 youth incentive, it is definitely yes as you are technically getting RM1,000 (100% returns) on a RM1000 investment. Additional due to compounding, this would net you an final 30-50% higher returns compared to without the incentive.

However, if you do not qualify for the PRS youth incentive, you will want to consider the tax bracket you are in. As we are based on a progressive tax bracket system, it may or may not make sense to invest RM3,000 for the tax relief. Above RM3,000, there are other investment alternatives with better returns and/or better flexibility in investing your funds.

 

More Info

Private Pension Administrators (PRS)

 

FAQ

Q: Where is the youth incentive credited to?
A: It will be credited to your sub-account A & can only be withdrawn upon age 55

Q: Is there a penalty for early withdrawal?
A: You will be taxed at 8% (and only can be withdrawn from sub-account B)

MyPF
Follow Us

MyPF

Admin at MyPF
Helping you to simplify and grow your Personal Finances.

Follow MyPF.my on facebook to get the latest updates!
MyPF
Follow Us

Latest posts by MyPF (see all)

MyPF

Helping you to simplify and grow your Personal Finances. Follow MyPF.my on facebook to get the latest updates!

4 thoughts on “PRS Youth Incentive

  • March 10, 2017 at 11:41 am
    Permalink

    Hi there. “In 2017, the incentive has been increased to RM1,000 for those who contribute at least RM1,000 in a single PRS fund from 2017-2018”, does this means for every RM1,000 deposited in PRS, there will be RM1,000 incentives from government? For example, RM2,000 in PRS account will earn RM2,000 from government?

    Hi Akido, Unfortunately, it is a one time youth incentive only for RM1,000 for RM1,000 PRS investment. For example, RM2,000 new PRS investment will still receive RM1,000.

    Reply
  • May 15, 2017 at 10:25 am
    Permalink

    “The youth incentive is applicable once only anytime from 2014-2018.

    This means that if you have received the RM500 PRS incentive previously, you will not be eligible for the new improved RM1,000 youth incentive.”

    Can you please explain the above statement?

    I am below 30 years old in 2017.
    2015 – I have invested RM1000 in PRS fund 1 – received the RM500 incentive.
    2016 – I have invested RM1000 in PRS fund 2 – yet to receive the RM500 incentive.

    If I invested RM1000 in 2017, am I still eligible for the RM1000 incentives? or I will only receive RM500 incentives instead?

    Hi Chris, You have received the RM500 youth incentive for your PRS investment in 2015. It is a one-time youth incentive, so you are unfortunately not eligible for the youth incentive anymore for your PRS investment in 2016. (You still qualify for the PRS RM3,000 tax relief).

    Reply
  • March 12, 2018 at 10:33 am
    Permalink

    hi im still 30 years old, if i contribute rm1k of my epf to prs in year 2018 (now) , will i still be eligible for the youth incentive of RM1000?

    Hi Shern Wei, yes you are eligible as long as you have not reached age 31.

    Reply
    • March 12, 2018 at 3:38 pm
      Permalink

      Hi, is the RM1k fresh funds or EPF money? i just spoke to a prs agent he said it has to be new money and not epf money.please advise.

      Hi Shern Wei, PRS needs to be from cash funds (not EPF). Check out more details on PRS including which PRS funds to consider

      https://mypf.my/investing/prs/

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

MyPF.my