How Safe Guarding Your Private Retiremet ?

M.nasir is CEO Counseling of Personal Money and Business

Iam frequently asked how safe private retirement schemes (PRS) are. This needs to be answered as it involvels ensuring that there are sufficient funds to replace our income when we retire.

The PRS industry was launched with a comprehensive and robust statutoryand regulatory framework to grow and protect the insterest of PRS contributors. As the PRS industry seeks to be the third social security pillar, by providing additional retirement funds, it needs to engender public confidence, that thee schemes are well regulated, supervised and developed over time.

A multi-tier risk governace structure has been implemented to ensure edequate and proper protection of the interest of PRS contributors, with the roles and responsibilities of all the key parties anvoled clearly spelt out. First, all the key parties involved must be licensed under the Capital Markets and Services Act(CMSA), which comes under the regulatory purview of th Securities Commission(SC). The SC grants the approvals for PRS providers, distributors nd trustees, as well the Private Pension Administrator (PPA), to operate in the PRS industry, only lincesed parties are approved to participate in the PRS.
Second, a single PPA, unique only to Malaysia, was established as the central administrator to provide efficienct account adminitration. The PPA is an independent organisation that serves and protects the interest of contributors.

Third, there are only eight licenced PRS providers approved by the SC. These licences providers have to abide  by a set of stringent guidelines. They were selected based on their investment management capability, experience and track record in managing public funds. The providers key duties and responsibilies include the marketing, administration and investment management of PRS Fund. Furthermore, they are required to establish thier risk management and compliance stucture to ensure that they meet all the regulatory standards and guidelines.

Fourth, the guidelines require that an independent scheme trustee be appointed to oversee the management and operations of the scheme in accordance with the trust deed and disclosure documents. The trustees also act as a "custodian" of monies invested in PRS Funds.

In the next article, i will explose the risk management..!