Malaysia’s private retirement scheme (PRS) assets rose 18.53% in 2021 as the number of new members and new funds increased, while the end of a reprieve on tax penalty for early withdrawals introduced in the early days of the coronavirus pandemic led to a sharp decline in pull-outs.
Figures released by Securities Commission Malaysia (SC) show that the PRS industry had 5.63 billion ringgit (US$1.38 billion) of assets as of end-2021, up from 4.75 billion ringgit in 2020.
The number of members rose 8.37% to 531,000, and there were two more funds last year, bringing the total to 59, the regulator says in its recently-published annual report 2021.
More than half, or 57%, of PRS members were 40 years and younger, one-fifth were between 40 and 50 years of age, and 23% were 50 and older.
The share of early withdrawals, which accounted for a majority or 52% of total pull-outs in 2020, fell to 19% last year.
“This is due to the expiry of the temporary exemption of the 8% tax penalty for withdrawals from sub-account B of up to 1,500 ringgit,” the SC says.
Early withdrawals from this sub-account other than to pay for education, healthcare or to purchase a home are subject to the penalty.
The government halted the penalty temporarily in April 2020 to help PRS members cope with the financial fall-out of Covid-19. The exemption ended on December 31, 2020.