PRS as the 1 st choice, retirement vehicle - PowerPoint PPT Presentation

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PRS as the 1 st choice, retirement vehicle

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  1. PRS as the most important, complementary retirement vehicle PRS as the 1st choice, retirement vehicle 1

  2. Malaysia’s Life Expectancy Source: World Bank 2

  3. Retirement Planning Children’s contribution EPF Stocks Unit Trusts Insurance Fixed Deposit Property 3

  4. Retirement Planning You’re lucky if your children don’t ask you for money Source: The Sun, 25 June 2012 AmInvestment Services, 30 Sept 2012 Bank Negara Malaysia, 30 Sept 2012 The Business Times, 24 July 2012 4 Stocks • Market cap of Bursa Malaysia stood at RM 1.208 tri at end-2011 Unit Trust • Industry AUM of RM 133,691.30 mil as at 31 Aug 2012 Insurance • Industry AUM of RM 178,306.20 mil as at end-2011 Deposits • RM 294,392.60 mil worth of total deposits by individual as at Aug 2012 • RM 166,330.80 mil worth of total deposits by enterprise as at Aug 2012 EPF • Manages RM 488.50 bilworth of assets Childrens Contribution • ?

  5. Life Expectancy & GDP Growth • 85 • 80 • 75 • 70 • 65 • 60 • 55 • 50 • 45 • 40 • 35 • 30 • 25 • 20 Life expectancy (years) * Purchasing Power Parity in USD. • 400 1,000 2,000 4,000 10,000 20,000 40,000 Income per person (GDP/capita, PPP$* inflation-adjusted) 5

  6. Malaysia: The need for an alternative pension system 6

  7. Retirement: not what it seems to be Only 5% Ready for Retirement in Malaysia More failing to save for pension Enough money for retirement? Even the rich say NO Boomers haven’t saved enough Retirement plan needed for Malaysians Source: The Star, 27 May 2007 BBC News, 21 May 2012 CNBC, 14 Dec 2011 Canadian Press, 28 June 2012 The Star, 28 Sept 2011 7

  8. Did You Know? There are 13 million EPF contributors But only 6.3 million are active members 7.37% X% has savings of >RM150,000 21.74% X% has savings of RM50,000 – RM150,000 70.89% X% has savings of <RM50,000 Source: The Sun Daily, 21 August 2012 8

  9. Have Malaysians Saved Enough? 14% X% of people utilise their EPF savings within 3 years 50% X% of people utilise their EPF savings within 5 years 70% X% of people utilise their EPF savings within 10 years 86% X% of people have only < RM100,000 EPF savings Only ~11,000 How many people have EPF savings of > RM 1,000,000 Source: EPF Survey 2003 & EPF Annual Report 2011 9

  10. Your retirement plan should address these questions Are your retirement savings sufficient for : • Rising cost of living • Unexpected medical costs • Inability to work after retirement age Will you face these financial situations? • No emergency funds • Need to borrow money from others • Can not afford to pay bills 10

  11. What is PRS? • Voluntary long-term investment scheme • Complements mandatory contributions made to EPF • To help individuals accumulate savings for retirement & plan for: • Possible health & care costs • Comfortable standard of living • Inflation • Each scheme has a range of funds to accommodate different retirement needs, goals & risk appetite • Regulated by SC 11

  12. Investment Options Members choose PRS Providers and funds according to their risk appetite & investment profile 1 or 2 Default option for members who select their PRS Provider but do not specify a fund option Individuals Employer may channel contributions to a particular PRS Provider, with employees choosing the type of funds offered by that PRS Provider 1 or Employer may channel contributions to a particular PRS Provider, and where employees do not make a fund selection, contributions can be channeled to default option of that PRS Provider 2 Employers 12

  13. Our First Products - 3 Core Funds 13

  14. How will PRS benefit you ? Individuals • Supplements retirement savings • Alternative retirement savings to complement EPF • PRS is flexible • Allows you to choose funds that best suit your investment needs • PRS is transparent • PRS members have timely access to fund performance & information • Helps you maintain a lifestyle that you desire • Tax relief 14

  15. How will PRS benefit you ? Employers • Tax deduction of employer’s contribution in addition to • statutory EPF contribution • Vesting flexibility • Incentive for staff retention & recruitment • Opportunity to provide employees with potentially better returns than FD rates • Improved investment choices for employees through a range of funds under the PRS 15

  16. Key Attractions on PRS by Company Preferences Source: Hay Group, 23 July 2012 16

  17. Which human capital issue does PRS help address ? A scheme for both retention & recruitment; benefits both the employee & the employer Source: Hay Group, 23 July 2012 17

  18. Building PRS as the ideal retirement planning vehicle in Malaysia 18

  19. 3 Pillars Pension Framework Non-contributory basic benefits financed by the state, fiscal conditions permitting Mandatory defined contribution plan with independent investment management Voluntary taking many forms (e.g. individual savings; employer sponsored; defined benefit or defined contribution) EPF PRS 2nd Pillar 3rd Pillar 1st Pillar Source: Pension Systems and Reform Conceptual Framework by Robert Holzmann, Richard Paul Hinz and Mark Dorfman, June 2008 19

  20. A look at Australia’s Superannuation System 20

  21. Pension Assets Allocation 80% of Australia’s pension assets is held by Private sector Public vs Private Sector By market values (2010) Source: Towers Watson & secondary sources. Methodology does not provide an estimate for 2011. 21

  22. Australia: A country that thrives on Super AUD$916 Bln (2008) AUD$2,276 Bln (2008) Increase in AUM growth of $1,360 Bln 52% 58% Source: Australian National Accounts, 2008 22

  23. The success of Super • Increasing trend of people moving towards a pension system. • Retirees can keep their funds in super pension while enjoying periodic withdrawals Growth of Superannuation Pensions Source: APRA & Australian Yearbook 2008 23

  24. Making PRS the ideal choice • Product • Performance • People • Public Awareness & Education 24

  25. Product: Pacesetters not followers Product innovators in an ever evolving market AmAsia Pacific REITs First Pure REITs fund in Malaysia 2011 25

  26. Risk & Return - Malaysia There is opportunity for low risk assets to deliver optimal adjusted risk returns. Optimal adjusted risk returns *Corporate Bonds are based on data from Jan 2004 to Dec 2011 Source: Bloomberg, Quantshop. Data extracted 24 August 2012. 26

  27. Performance * Lipper Investment Management for the period 31 December 2003 to 31 December 2011, based on total returns which includes income from dividends and interest as well as capital appreciation. Performance shown is also net of management fees. ** Maybank 12-month fixed deposit rate 27

  28. People • Andrew Wong, • Chief Investment Officer, Equities • Best Islamic Equity Fund (Global): Am Namaa' Asia Pacific Equity Growth Islamic Finance News Awards 2011 • Mastermind behind AmAsia Pacific REITs, Malaysia’s first pure REITs fund • Goh Wee Peng • Chief Investment Officer, Fixed Income • The Most Astute Asian Local Currency Investor: The Asset Benchmark Research 2011 • One of The Most Astute Asian G3 Denominated Bonds Investors: The Asset Benchmark Research 2011 • Mastermind behind AmDynamic Bond, the best MYR bond fund in Malaysia 28

  29. Our Awards World Finance Investment Management Company of the Year, Malaysia 1 Islamic Asset Management House – Malaysia 2 Asset Management Company of the Year 3 (2 Consecutive Years) The Most Outstanding Islamic Fund Manager 4 Best Islamic Equity Fund (Global) Islamic Finance News Awards 20115 • World Finance Investment Management Awards 2012, March 2012 • The Asset Triple A Awards for Islamic Finance 2012, June 2012 • The Asset Triple A Investment Awards 2011, September 2011 • KLIFF Islamic Finance Awards 2011, September 2011 • Islamic Finance News Awards 2011, September 2011

  30. No.1 Fixed Income Provider in Malaysia* Winner of 3 awards at The Edge-Lipper Malaysia Fund Awards 2012** Best Bond Fund Group & Best Bond Fund AmDynamic Bond Best Bond Malaysian Ringgit Fund (5 Years) Ending December 31, 2011 for 4 Consecutive Years Best Fund Group (Bond) Ending December 31, 2011 for 5 Consecutive Years AmDynamic Bond Best Bond Malaysian Ringgit Fund (3 Years) Ending December 31, 2011 for 6 Consecutive Years *In terms of Funds Under Management (FUM) for Unit Trusts Funds and Separately Managed Funds. Source: Malaysian Association of Asset Managers (MAAM) & Lipper Investment Management & AmInvestment Management, 31 December 2011 **Source: The Edge- Lipper Malaysia Awards 2012, February 2012 30

  31. Public Awareness & Education At ZERO cost to Employer • PRS 101 Workshop organised for Management & Staff • Provision of marketing materials & support • PRS educational materials (booklet, flyer) • Pre & Post Servicing from our RMs • PRS also works as a • Retention scheme • Motivational scheme 31

  32. Aging & Social Welfare system Components 3 Pillars for Old Age Protection Pension System Components • Governance • System level • Trustee level • Regulatory & supervision • Incentives • For members • For employers • For providers • System Design • Equity • Adequacy • Sustainability • Predictability • Robustness • Penetration • Employee • Employers Economic Context Maximising long term retirement savings for members Source: Ernst & Young, 2012 32

  33. Never Too Late to Quit Never Too Early to Start 33

  34. Disclaimer This publication has been prepared for general information only and is not to be taken as containing any advice or recommendation. Wherever possible, care has been taken to ensure accuracy, and all facts and figures are correct at the time of publication. AmInvestment Services Berhad shall not be held liable, for any loss or damage of whatsoever nature and howsoever caused, directly or indirectly, for readers’ decisions made on their finances, investments or anything whatsoever. The information contained in this promotional material is general information only and does not take into account your individual objectives, financial situations or needs. You should seek your own financial advice from an appropriately licensed adviser before investing. Islamic Asset Management House – Malaysia* Asset Management Company of the Year, Malaysia for AmInvestment Bank Group’s Fund Management Division (2 consecutive years)** Winner of 3 awards at The Edge-Lipper Malaysia Fund Awards 2012*** – Best Bond Group Award and Best Bond MYR Fund (3yrs & 5yrs) for AmDynamic Bond *The Asset Triple A Awards for Islamic Finance 2012, June 2012 **The Asset Triple A Investment Awards 2011, September 2011 ***The Edge- Lipper Malaysia Awards 2012, February 2012 34