News – Malaysia’s pension reform may boost Islamic funds

You cannot plunder unnoticed when there is only one “tabung” and that “tabung” is obviously well known to most people. So, you make as many “tabung” as possible, so that your plundering will go unnoticed. Hopefully unnoticed for a long time as long as the music do not stop. Then to make it desirable, dress is with “Islamic” deco. So that people will not be aware of the mechanism beneath the “Islamic” layer.

Under the new, voluntary Private Retirement Scheme (PRS), which will not replace the EPF but supplement it, contributors will be able to allocate money to a wide range of products offered by private-sector fund management firms.

This will allow them, if they choose, to target syariah-compliant investment – potentially increasing the amount of money going into Islamic instruments.

The scheme’s governing body, which will oversee how the fund managers operate the Private Pension Administrator (PPA), was officially launched last week.

“PRS will contribute towards the growth of Islamic fund products,” Ahmad Zakie Ahmad Shariff, board member of the PPA and chief executive of the Federation of Investment Managers Malaysia, said.

The initial rollout of 30 PRS products will include six Islamic funds, he added.

“Early adopters will have much to gain – especially for the Islamic players,” said Mahadzir Ahmad, a wealth management consultant and an instructor at the Financial Planning Association of Malaysia.

As of March 31 the EPF managed assets worth RM488.5 billion, according to company data. That is larger than the RM435.36 billion of assets under management in Malaysia’s entire fund management industry, according to the Securities Commission data.

At least partly because of PRS, Malaysia’s private pension industry is expected to grow to RM73 billion by 2020 from effectively zero now, according to a report by the government’s Economic Transformation Programme.

The securities commission has a more modest but still sizeable estimate; in April last year, it said:

“Over the next ten years, it is projected that assets under management in the private retirement scheme industry will grow to RM30.9 billion.”