Malaysians have low awareness of private retirement schemes or PRS and those that are cognisant are shying away from investing in the schemes because of low returns and relatively inflexible withdrawal terms.
The findings are based on a survey by the Federation of Investment Managers Malaysia (FIMM) and research firm Ipsos. Only 28% of respondents were aware of PRS, which ranked 11th in terms of product awareness among retail investors.
“Due to concerns on low returns and penalties for early withdrawal, investors are hesitant to invest in PRS,” FIMM says in a report published recently.
According to the group, addressing concerns and misconceptions about unit trust schemes and PRS is crucial for the schemes’ growth.
“By providing clear and accurate information and designing targeted engagement strategies, financial institutions and policymakers can increase awareness and understanding among the public, building confidence and encouraging wider participation in unit trust schemes and PRS investments,” the report says.
There were 2,034 respondents in the survey. The majority, or 71%, were between 18 and 39 years old.
The highest product awareness among retail investors were unit trusts at 64%, followed by insurance at 63%.
“There remains a lack of knowledge or awareness regarding how investing in unit trust schemes or PRS can facilitate retirement planning,” the report says.
Amanah Saham Nasional investment schemes managed by a unit of Permodalan Nasional, Malaysia’s largest fund manager, were the third highest ranked in terms of product awareness at 60%.
Fixed deposits and gold rounded out the two five spots at 56% and 48%, respectively.
At the other end of the scale, product awareness of exchange-traded funds was only 11%, earning them the lowest ranked spot at number 18.
The survey also studied spending and savings behaviour pre- and post-Covid-19 and found that 58% who didn’t save prior to the pandemic have started doing so.
“There has been a notable shift in financial goals, with retirement gaining prominence while vacations are deprioritised,” the report says.