It’s important to plan for your retirement, since the income you earn now isn’t just for you to pay for your daily expenses, but also for you to save money to live on when you retire. After all, you don’t want to end up working for the rest of your life, do you? And because of compounding interest rates, the more you save for your retirement in these funds, the more you can grow your money each year. So, it’s best to start saving for retirement as early as you can.

Unlike regular employees, self-employed workers might not have retirement savings in EPF, since it is not mandatory for them to contribute to EPF like it is with salaried employees. But contributing to EPF is a safe long-term investment to consider, so you should think about saving for your retirement through EPF, and you can do it through EPF’s voluntary i-Saraan scheme.

You could also save for your retirement through Private Retirement Schemes (PRS). PRS are a long-term investment scheme to help people build their retirement fund. However, unlike EPF, they do not guarantee a minimum dividend. You can also lose money from investing in a PRS, as your capital is not protected.

EPF’s i-Saraan

What is it?

The i-Saraan scheme is available for self-employed workers who don’t get a regular income to save for their retirement. There is no mandatory minimum contribution amount. You can contribute any time you like up to a maximum of RM60,000 a year. Check out how much you can save if you contribute your money to EPF with our retirement savings calculator.

EPF guarantees contributors a minimum annual dividend of 2.5%, and have paid an average annual dividend of 5.6% for the last 20 years. This is higher than the interest you can earn from a fixed deposit account. You can make a full withdrawal from your EPF account when you are 55 years old, and make partial withdrawals if you need to buy a house or pay medical expenses.

Who should get it?

• Self-employed workers
• People with no regular salary e.g. small traders, farmers, and freelancers

Why should you get it?

• Annual dividends (guaranteed at least 2.5%).
• Income tax relief up to RM4,000.
• Death benefit of RM2,500 for your appointed beneficiary when you pass away.
• Free access to EPF’s Retirement Advisory Service.
• Under a special government incentive, the government will match 15% of the money you contribute, up to RM250/year, and contribute to your account until 2022.
• It’s flexible. You don’t need to contribute a minimum amount.
• Contributing can improve your credit score.
• Since you don’t have mandatory monthly EPF contributions like with salaried workers, this will help you save for your retirement.

When to apply?

• You can apply any time.
• The government will pay the special incentive until 2022, so apply before then to get this benefit.

Requirements:

• Malaysian citizen
• Self-employed
• Registered as an EPF member
• Below 55 years old
• Submit Form KWSP 16G(M) to an EPF branch to apply for i-Saraan.

How to register?

• To register for i-Saraan, get Form KWSP 16G(M) from any EPF counter or download it here.
• Fill and submit the form to an EPF branch. Bring your MyKad to verify your identity.

What you need to do:

• Get Form KWSP 6A (2) from any EPF counter or download it here:
• Fill out the form
• You can submit the form and contribute to EPF in one of these ways:
  • Cash or cheque at EPF receipting counters at state capitals
  • Fund transfer through online banking via:
    • Maybank
    • Public Bank
    • RHB Bank
    • Bank Muamalat
    • CIMB Bank
    • Bank Islam
  • Cash or cheque at these bank agent counters:
    • BSN
    • Maybank
    • Public Bank
    • RHB Bank

Private Retirement Schemes

What is it?

It is a long-term retirement scheme to help individuals grow their savings for retirement. It is voluntary and meant to complement EPF contributions. The minimum contribution for a PRS depends on the scheme you choose. You can contribute to your PRS any time you want, so it doesn’t have to be monthly which can be helpful if you don’t get a regular income.

Your contributions to your PRS fund will be divided into two separate sub-accounts by the PRS Providers:

Eligibility

• At least 18 years old at the date of the account opening
• MyKad

Why should you get it?

• You can get a tax exemption up to RM3,000 if you contribute to a PRS.
• You can potentially earn a higher interest on your investment compared to a fixed deposit account. However, unlike EPF, you’re not guaranteed a minimum dividend.
• You can contribute any time you want.

Where can you apply?

You can apply for a PRS from these providers:

• Affin Hwang Asset Management Berhad
• AIA Pension and Asset Management Sdn Bhd
• AmFunds Management Berhad
• Principal Asset Management Berhad
• Kenanga Investors Berhad
• Manulife Asset Management Services Bhd
• Public Mutual
• RHB Investment Management Sdn. Bhd.

What you need to remember:

• Your capital in a PRS is not protected.
  • You can potentially make a loss as there are investment risks.
• PRS do not guarantee a minimum dividend.
  • If your fund is not profitable in a year, you won’t be able to get a dividend.
• You have to pay a sales charge, an annual management fee and administration fees.