SUNDAY STAR, 17 JULY 2016

special

PLANNING YOUR RETIREMENT

For the years ahead

SUNDAY STAR, 17 JULY 2016

2 planning your retirement

PICTURE this: your retired-self;

going on holidays, sitting by the
beach, enjoying a worry-free postretirement life with your loved
ones. This does not need to be a
far-fetched dream. With early
planning, this can be your
retirement life.
Benefits of starting early to save
for your retirement:
1. Compounding The earlier
you start investing, the greater the
accumulated return on your
original investment. This is due to
the effects of compounding yield.
2. Long-term investment
horizon Assuming that you start
earning by the age of 26, you have
more than 30 years to save for
your retirement fund.
3. Ringgit cost averaging (RCA)
Regular investments done over
the long-term would enable you to
benefit on RCA. RCA works to
reduce exposure to risk that is
associated with making a single
large purchase.
Therefore, your portfolio can
grow steadily with no market
timing involved.
On top of this, another way to
reduce exposure to risk is through
diversification of unit trust
investments allocated over selected
domestic, regional and global
equity funds as well as fixed
income funds.

Why is saving for your

retirement important?
With the life expectancy of
Malaysians having risen to
74.8 years on average this year,
Malaysians can look forward

Shape your future now

RM000
Ms Alia Starts
investing at age 30

1,400

26 years old

1,200

60 years old

35 years to prepare
retirement fund

1,000

75 years old

Retirement period
of 15 years

800

Effective long-term investment begins at an early

age (refer to 2. Long-term investment horizon).

600
400
200

Mdm Ho Starts
investing at age 40

0
1

11

13

15

17

19 21

Name

Start
age

Investment
period
(years)

Compounding
period up to
age 60
(years)

Ms Alia

30

20

30

Mdm Ho

40

20

20

23 25 27 29 31
Yearly
investment
(RM)

Total amount
invested (RM)

Total invesentment
value* at
age 60
(RM)

10,000

200,000

1,320,149

10,000

200,000

557,645

* By starting 10 years earlier, the investment value of Ms Alia could grow 137% more than the investment value of
Mdm Ho when both of them reach the retirement age of 60, assuming unit trust rate of return is constant at 9% per
annum. This is only an illustration and does not indicate the past or future performance of any specific unit trust
fund.

to more than a decade of

post-retirement life (assuming
retirement age of 60).
This is not taking into account
the many individuals who look
forward to retiring early.
To retire is to relieve yourself of

your ability to bring home salary,

which you use to fund your
many expenses such as property,
transport, food and medication.
This is also when you expect to
use your savings.
At the same time, the effects of

inflation, which will shrink the

value of the ringgit over time, will
inadvertently also shrink your
retirement savings.
This effect can be countered if
you allow your money to grow at a
rate higher than inflation.

Overcoming market turbulence

UNCERTAINTY has long been a
defining characteristic of financial
markets. However, unit trust
investors who remain focused on
their investment objectives and
keep their emotions in check tend
to emerge as winners during
turbulent times.
Fluctuation is an inevitable
feature of stockmarkets. Changes
in market sentiment, economic
trends and liquidity conditions are
factors that cause stockmarkets to
be volatile. Consequently,
emotional responses to market
sell-offs can cause investors to
make impulsive decisions.
There are several solid investing
strategies that have withstood the
test of these uncertain periods.
Here are a few tips on how
investors can weather the ups
and downs of turbulent markets:

Do not panic during

market downturns
Due to changes in market
sentiment, market fluctuations are
inevitable. When markets decline,
investors tend to be over-anxious
and are prone to making poor
decisions.
This may be harmful to an
investors financial well-being as
initial investment plans are
arbitrarily changed or abandoned.
Remember to keep a clear and
rational mind when assessing the
impact of the market on your
funds performance.
Market downcycles offer
potential investment opportunities

for long-term investors to

accumulate shares that have fallen
below their fundamental values.
To reap the benefits of equity
funds, investors are reminded that
the returns of these funds come
from the discipline of remaining
invested over the medium to long
term.
This discipline enables investors
to tap into the long-term growth
potential of companies that the
funds are invested in. In other
words, investors have to remain
patient to allow their investments
to grow over time.

Consider your
investment horizon
If time is on your side, shortterm market fluctuations will
eventually even out over time.
A longer time horizon will allow
you to invest in more volatile
investments while at the same
time take full advantage of the
compounding effect of your
investments.
Likewise, the shorter the
investment horizon, the more
conservative ones investment
strategy should be with more
weightage given to fixed income
funds.

Mitigate risk by
diversifying investments
In view of how business cycles
can adversely affect a particular
sector or economy, it is always
safer not to put all your eggs in

one basket.
While investing in a narrow
range of sectoral theme funds or
single country funds may produce
attractive returns when they
outperform, your returns may be
adversely affected when these
sectors or markets slow down.
Thus, investors should select
funds with different asset classes
that do not move together so that
market swings in one part of their
portfolio are offset by another
part. Failing to diversify may
leave investors vulnerable to
fluctuations in a particular sector
or market.
In addition, investors should be
mindful that owning many funds
that focus their investments in a
particular sector or market does
not necessarily equate to being
invested in a diversified portfolio
of sectors and markets.

Time in the market is

better than timing the
market
Timing the market is far less
important and far riskier than
time in the market. When the
market consolidates, some
investors tend to panic and
impulsively redeem their
investments.
After cashing out of the market,
they attempt to catch the market
at its bottom.
However, when the market
rebounds, it may be too late for
them to re-enter the market.

Investors who opt to stay out

of the market during consolidation
periods are not able to profit
from capitalising on low market
prices.
Meanwhile, investors who
practise ringgit cost averaging
(RCA) strategies continue to invest
steadily during such periods and
reap the benefits of market lows.
Thus, RCA is a disciplined
approach to investment that
enables investors to ride through
the highs and lows of markets.
The RCA approach takes the
guesswork and emotion out of
investing.
This method allows you to
average out the cost of your
investment over time as you will
buy fewer units when prices rise
and more units when they fall by
investing a fixed ringgit amount
into unit trust investments on a
regular basis.
This time-tested practice allows
you to ride through market
fluctuations in pursuit of longterm capital growth as it mitigates
the volatility of markets over time.
These simple steps in careful
planning and maintaining a
disciplined approach can help you
make better decisions for your
financial well-being and long-term
investment performance.

n For more information,

contact your servicing unit
trust consultant, e-mail
finplan@publicmutual.com.my
or visit www.publicmutual.com.my
today.

Retirement planning
with unit trust and
private retirement
scheme (PRS)
investments
Ask yourself:
l Why are you working now?
l What are you looking forward
to when you retire?
Chances are you are working to
sustain your present life, but also
looking forward to saving a
sizeable sum to enjoy your
retirement life many years down
the road.
Now ask yourself these
questions:
l Do you know what the effects
of inflation can do to your savings?
l Are you saving enough for
your retirement?
A general rule of thumb is that
for your retirement years, you will
need 100% of your current annual
expenses plus inflation. This is
because, although some expenses
may decrease when you retire,
some will also increase. Therefore,
both expenses will offset each
other.
This expenses approach for
planning your retirement savings
takes into account the inevitable
inflation, which will eventually
decrease the value of your savings.
To know how much to save
for your retirement, use the
retirement calculator available on
Public Mutuals website. The
analysis will provide you with
options of lump sum or monthly
investment to kick-start your
retirement savings.
Public Mutual offers more than
120 funds, of which nine are PRS
funds; six core funds and three
non-core funds. PRS, which was
introduced in 2012, is especially
catered to supplement the
compulsory Employees Provident
Fund (EPF).
Speak to Public Mutuals unit
trust consultants or walk into
any Public Mutual branch today to
start saving for a truly golden
retirement life.

n For more information, visit

www.publicmutual.com.my.
Disclaimer
PUBLIC Mutual has made a
sincere effort to ensure the
accuracy and quality of this
material (both these articles).
The material, information,
illustration and explanation
herein should only be used as
a general guide and is not
intended to be professional
advice.
No liability is accepted in
the event of loss arising from
a lack of accuracy, suitability,
completeness or quality of the
information contained
therein. You are advised to
obtain independent
professional advice before
acting or relying on any
suggestion or information in
this material.

SUNDAY STAR, 17 JULY 2016

SUNDAY STAR, 17 JULY 2016

4 planning your retirement

Transforming retirement living

THE moment I saw the word
redefining I knew it accurately
described what I wanted to do; I
wanted to redefine retirement
living for Malaysians, says Siew
Yin Leng, founder of GreenAcres
and co-founder of Total Investment
Sdn Bhd, a business that her
husband Chong Heng Kiong started
with her.
Since 1993, Total Investment has
grown to become a reputable
property developer known for its
well-planned, good-quality and
reasonably priced homes in Ipoh.
With a dream that started in
1992, Siew visited, researched and
observed more than 20 retirement
villages around Australia and
aspired to bring such a facility and
lifestyle to Malaysia.
It took us more than 20 years to
turn this into a reality and I am
proud to be delivering the first of
an emerging trend of retirement
villages in Malaysia, says Siew.
Siews mother had moved into a
retirement home in Melbourne,
Australia. It has always been a
difficult subject to broach given
our Asian culture. We didnt want
our mother to feel that we were
abandoning her and realised that
our friend had the same concern
for his mother. So when he
suggested for our mother to
accompany his to visit a retirement
home, we were thrilled at the
opportunity to explore the idea.
Once we visited the retirement
village and my mother saw the
environment, facilities and services
available to her, she was beaming
with happiness and gave us the
thumbs-up.
She never expected to find such
a place where retirees could live.
She has chosen to make retirement
living her new home. We couldnt
have cared for her better, says
Siew.
Retirement is about
rediscovering yourself, exploring
everything that will keep you
healthy and happy, taking life at
your own pace and spending time
for meaningful connections and
relationships.

Founded by Siew Yin Leng, GreenAcres offers luxurious retirement living that promises comfort, security and care
for its occupants.

It is about self-respect,
independence and finding a
purpose that will keep you fulfilled.
Retiring well is a choice you
make. Although we allocated
13 acres (5.26ha) of land in Meru,
Ipoh, for this purpose 10 years ago,
we realised we needed to engage
Australian consultants, architects
and interior designers to
conceptualise the design and plan
the operations. That was the only
way to get it right, says 72-yearold Siew.
Currently managed and directed
by her son John Chong, GreenAcres
is peninsular Malaysias first
integrated retirement village
located in Meru. It is set in a
beautiful landscaped environment
that offers purpose-built amenities
and facilities, including a
recreational clubhouse, tailored to
the needs of retirees.
The project comprises 105

The units at GreenAcres are warm and cosy, offering a comfortable

environment for home living.

Ideal enclave for golden years

GREENACRES is located in the
heritage city of Ipoh, which is the
destination for retirement living.
Here you will find the serenity
that comes with nature, a relaxed
pace of life but the convenience
of a city. Here are 10 reasons you
should consider Ipoh for
retirement living.

l The city is surrounded by

nature and limestone hills,
striking a perfect balance of
tranquil living and urban
facilities.
l In April 2014, U.S. News &
World Report recognised Ipoh as
the third most affordable place in
the world to retire.
l Ipoh is well-recognised as a
food heaven in Malaysia with
popular local delights.

l Ipoh has a more relaxed pace

of life with less traffic congestion
and fewer heavy industries,
leading to better air quality in the
city.
l The city has good healthcare
services with leading service
providers such as KPJ Ipoh
Specialist Hospital, Pantai
Hospital Ipoh and Fatimah
Hospital. There is also an
upcoming hospital located 1.2km
away from GreenAcres that is
estimated to be completed by the
end of 2018.
l Ipoh has excellent
connectivity conveniently
accessible by plane, bus, train or
car on the North-South Highway.
It is strategically located a twohour drive away from Kuala
Lumpur and Penang.

l Despite having a population

of more than half a million, Ipoh
feels like a cosy town with
modern infrastructure minus
the density of skyscrapers.
l English-speaking locals
promote a multicultural and
expatriate-friendly environment.
l Ipoh has many unique
heritage sites, limestone caves
and cave temples, hot springs,
theme parks and recreational
parks.
l Meru is a fast-growing
suburb of Ipoh in which the new
Perak State Government Offices
and Administrative Departments
as well as the main interstate bus
terminal, a major supermarket,
hotel with good facilities and a
championship golf course are
located.

landed villa units (one to two

bedroom configurations) and 72
apartment units (one to three
bedroom configurations), of which
Phase 1 villas are scheduled to be
completed by March next year.
The villas are 734sq ft (68.2sq m)
to 1,105sq ft (102.6sq m). A future
low-care facility will also be built
on the 13-acre (5.26ha) site.
All units come with fitted kitchen
cabinets, a cooktop and rangehood,
built-in wardrobes, storage
cupboards, air conditioners, water
heater, LED light fittings and insect
screens, making the transition into
your new home as hassle-free as
possible.
These units are designed to be
functional, personal and adaptable
for future use.
They come with features such as
a wider front and internal
doorways, step-free bathrooms
with grab bars, slip-resistant
surfaces, sensibly located light
switches and a 24-hour emergency
call system. Some extra touches of

luxury include solid timber

flooring and granite kitchen
benchtops.
One of the most important things
you can do to stay well and happy
as you mature is to maintain your
sense of purpose by staying
connected to people and things
that matter to you.
Moving into a retirement living
community provides ample
opportunities to keep active and
healthy.
In these challenging times,
growing old is not simply about
being able to afford to retire
gracefully. For peace of mind
during retirement, one should not
have to worry about small details
such as finding reliable help to
maintain the home.
Graceful retirement is the
freedom to grow old with our
friends in the same place with
the assurance that future needs
will be taken care of within your
home and by the community,
shares S. V. Singam, 66, future
resident of GreenAcres.
From fitness activities such as tai
chi, line dancing or morning walks
on the extensive walking paths, to
social activities such as morning
and afternoon tea, billiards, card
games and movie nights, there is
an array of facilities available for
you to maintain your health and
well-being.
The clubhouse also has a gym,
wellness centre and recreation
rooms where residents can enjoy
karaoke sessions or mahjong with
friends or simply read in the
library/computer room.
Residents are encouraged to
stay socially connected and
physically active and make the
most of all the facilities available at
the village. After all, its all about
you, says Siew.
GreenAcres offers a lifetime
lease priced from RM300,000,
which is fully refundable at the
point of exit.
For the upkeep of security,
landscaped gardens, clubhouse
facilities and services provided, a
monthly general service charge of
RM340 onwards applies.

n For more information, call

05-2536 555 or visit
www.greenacres.com.my.
What to expect at
GreenAcres?

Australian-inspired
retirement experience
Gated and guarded
community living
Trained and professional
management staff
Senior-specific design
features in homes
Green landscapes at
your doorstep
Fully functional
clubhouse
Social, intellectual and
physical communal
activities
A village shuttle bus to
close public amenities
and areas of interest

SUNDAY STAR, 17 JULY 2016

SUNDAY STAR, 17 JULY 2016

6 planning your retirement

Enough talk,
more action
IT is a fact and long-held belief that
if you fail to plan, you plan to fail.
Perhaps this sounds familiar, so
why have you not yet taken action
and left ground zero?
While ground zero does have
some level of comfort, it gives you
a false sense of well-being and
security it is time to take charge
of your personal finances and
retirement fund.
To have a comfortable and
enjoyable retirement, you need to
start planning now. This is because
there are many things in life that
are beyond control and you would
not want to be caught unprepared
when things go wrong.
Perhaps you are not the do-ityourself (DIY) type with limited
knowledge of the stock market,
mutual funds and insurance and
number crunching is not your
thing. Meanwhile, you have
modest savings in deposit and you
are unsure of what you can do
with it to generate a higher return.

Seek a financial planner

So who can you go to for help?
Who can you trust to confide in
and provide you with sound advice
regarding your finances?
In this case, a financial planner
is the perfect person for the job. A
financial planner is someone you
can trust to advise you on the
management of your personal
finances.
Financial planners are qualified
professionals who can advise you
on how best to save, invest and
grow your money.

Ismitz Matthew
De Alwis.

They can help you with specific

financial goals such as preparing to
make purchases (such as a house)
or give you an overall view of your
finances and the relationships
between the different asset classes
in your portfolio. Some financial
planners specialise in retirement
or estate planning while others
operate on a range of financial
matters.
However, not all financial
planners are experts and the
concept of financial planning is still
at a nascent stage in the country.
Over the years, there has been
much talk about change and the
pioneers of the industry must
transform from being productdriven to advisory-based
individuals who are focused on
clients needs and interests.

Take action and move

forward

Seek the help of qualified financial planners to best save, invest and grow your money.

Client-centric service

Financial planners
also help you focus on
financial strategies
and planning. Staying
disciplined is tough
without help and
procrastination is
often the cause
of many financial
problems and loss of
unrealised potential.
Hence, it is advisable
to have a financial
planner who can help
you on your journey
and stay on track.

Financial planners must decide

how to run their business
whether they will choose to be
bound by an agency structure
where commissions to the
product sellers take
precedence or whether
they will choose to be
client-centric, spending
quality time with clients
to understand their
financial and life goals
before recommending
the best-suited product
rather than pushing
those that are not
applicable to clients
objectives. While it is a
tough decision to make, it
is a very necessary one.
Many argue that the
final decision need not be
one or the other but to find
the balance between
clients interests and
remuneration of financial
planners.
Whether this becomes

the accepted formula in the

industry will rest on clients
shoulders their preferences will
ultimately determine how financial
planners ply their trade.
Product-driven financial
planners have long maintained
that the effort made and time spent
with clients to work out a financial
plan is too arduous and does not
commensurate with the income
expected.
To them, it is much easier to just
do traditional hardsell, which is
perhaps why many people are
apprehensive about engaging a
financial planner as they do not
want products to be pushed down
their throats.
Meanwhile, proponents of
needs-based selling say it is
critical for financial planners to
understand their business from a
clients perspective.
The clearer they explain their
services to clients, the easier it is

Financial planners are not to be

confused with remisiers, who help
with trading stocks. Neither are
they accountants who assist in
your taxes, insurance agents who
offer life insurance policies nor are
they unit trust consultants who
urge you to invest in mutual funds.
They are also not will writers who
assist you in family trusts and
estate planning.
While you as the individual must
change your mindset and kick into
gear to achieve your financial and
life goals, the industry and
financial planners need to change
as well to move forward.
They have to move beyond
meaningless squabbles and trying
to achieve the perfect business
model. Times are changing and the
only constant in the continuum is
change.

for prospective clients to make

critical decisions to engage them.
The consultative approach in
need-based selling requires
financial planners to listen to
clients and hold the clients best
interest at heart when
recommending products.
As a potential investor and
consumer of financial planning
services, you must decide if you
would like to venture into financial
planning independently or seek the
services of an expert to help
manage your money.
For some, taking a DIY approach
may be a good idea but for others,
it is not plausible as to be skilled
and proficient in personal financial
planning takes hours of learning
and research.
Hence, as you progress in your
career and gain greater income, a
financial planner can help you
save ample time in managing your
money.
Financial planners also help you
focus on financial strategies and
planning. Staying disciplined is
tough without help and
procrastination is often the cause
of many financial problems and
loss of unrealised potential.
Hence, it is advisable to have a
financial planner who can help
you on your journey and stay on
track.
With a myriad of things to do
when it comes to organising your
personal finances such as capital
accumulation for emergencies,
family, education and protection
against risks of premature death,
disabilities, medical and long-term
care expenses, unemployment,
properties and liability losses as
well as your general investment
portfolio such as retirement
planning and provision for
retirement income, tax planning,
estate planning and property
management, you can be
overwhelmed.
These are complex tasks that

require expert assistance and it

would be wise to seek the help of a
good financial planner.
Financial planners and clients
alike need to undergo a mindset
change. You as a client need to stop
putting off what needs to be done
and start planning to secure a
more organised financial life and
be prepared for retirement.
Financial planners, on the other
hand, need to throw out old
business models and start looking
at financial planning from a
different standpoint, one that does
not put commissions first but
instead has the best interest of
clients at heart. By Ismitz
Matthew De Alwis

n Ismitz Matthew De Alwis is the

executive director and chief
executive officer of Kenanga
Investors Berhad. He is a certified
financial planner and also the
deputy president of Financial
Planning Association of Malaysia.

When planning
your retirement:
l Account for large
purchases you are looking
forward to such as a holiday,
and everyday living expenses
l Aim for a larger sum
for your egg rather than
underestimating what you
will require
l Consider creating three
different budgets for each
phase of retirement to
account for the variations in
spending
l For healthcare expenses,
use your own health and
family history as a guide
l Keep an emergency fund
in retirement in case of
unpredictable health
problems

SUNDAY STAR, 17 JULY 2016

SUNDAY STAR, 17 JULY 2016

8 planning your retirement

THIS may not come as news to

many, but retirement readiness in
Malaysia is at an all-time low.
The question remains, however,
how many Malaysians are taking
steps to ensure they are well
prepared to stop working?
Employees relying on typical
mechanisms of retirement
planning could find themselves
short of cash just a few years into
their retirement because not
enough attention, time and funds
have been invested to create a
buffer.
Have you crunched the numbers
and calculated future expenses?
What about medical care in your
later years?
As of Dec 31 last year, only 38%
of active Employees Provident
Fund (EPF) members have met the
basic savings amount of
RM196,800.
Besides this, 65% of members
aged 54 have less than RM50,000
in their accounts and if they have
no other sources of income or
savings, this amount will be
exhausted within five years if
spending is kept below RM820 a
month.
This equates to a meagre RM27
a day for food, petrol, toll and
other necessities. Moreover, this
has to include your medical and
supplement intake as well as any
desired entertainment and lifestyle
options, assuming the car and
house have all been paid off.
These numbers do paint a bleak
retirement picture. To make it
worse, chances are that by the
time we realise our funds are
insufficient, it will be too late to
take any concrete steps.
Reports from the World Bank
and EPF point to the fact that many
Malaysians are far from being
retirement ready.
For the average Malaysian who
has been working for 30 years, the
basic retirement savings from EPF
contribution will bring in income
replacement of 30%.
Income replacement ratio is a
persons gross income after

Building a
comfortable retirement
retirement, divided by his or her
gross income before retirement.
It serves as a measure of
retirement income adequacy.
In Organisation of Economic
Corporation and Development
(OECD) countries, the income
replacement ratio is 57%.

PRS: The good news

To accelerate the development of
the private pension industry in
Malaysia, the Government initiated
the private retirement scheme
(PRS) to enhance the overall
retirement savings of Malaysians
and effectively complement their
EPF. Anyone above the age of 18 is
eligible for PRS.
PRS is an effective way to grow
your savings. Additionally, there
is personal tax relief of up to
RM3,000 per year on top of the
RM6,000 per year tax relief already
given for EPF contributions and life
insurance premiums.
This could save taxpayers as
much as RM780 per year
depending on their tax bracket.

With PRS, even a small amount

can go a long way. For example,
one can start with an initial RM100
and then RM50 per month
subsequently, or even make lump
sum contributions.
Amounts such as these are
affordable, proving that putting
aside a little bit more for your
retirement does not necessarily
mean a massive sacrifice.
Keep in mind that starting to
save early for your retirement can
be very beneficial because it is all
about using the power of time to
work for you and grow your
savings.
The best thing about PRS is that
it is accessible to everyone because
the scheme is designed to take into
account the escalating cost of living
in Malaysia. There are many
options for contributions.

Tool to attract and

retain employees
PRS can be an attractive
remuneration tool for employers to
offer their employees as part of a

Dispelling concerns over PRS

OPERATING since 1995, CIMBPrincipal Asset Management Bhd
specialises in Malaysia equities,
fixed income securities and cash
investments.
To help clients accumulate
larger retirement savings, the
company offers two voluntary
private retirement schemes (PRS)
CIMB-Principal PRS Plus and CIMB
Islamic PRS Plus.
Here are some clarifications
concerning PRS.
l PRS may not withstand
market uncertainties PRS is
designed to be a long-term
scheme. Because time is money, it
will be able to ride out market
fluctuations in the long run. With
ringgit cost averaging investment
strategy, your savings/
contributions on a monthly basis
can minimise downside risk.
When prices are high, this
monthly investment buys fewer
units and when prices are low, the
same amount of money can buy
more units. Over time, this method

spreads your risk and you will

probably end up with more units
at lower prices than if you bought
them with lump sum investment.

l PRS may not have a large

range of investment types or
low-risk funds With CIMBPrincipal, you have the freedom to
choose from the funds in both
CIMB-Principal PRS Plus and
CIMB-Islamic PRS Plus. You can
choose the funds that best suit
you, taking into consideration all
your retirement planning needs.
If you want to leave the
investment decisions to the
experts via Do-It-For-Me option,
choose either CIMB-Principal PRS
Plus or CIMB Islamic PRS Plus.
Then, the appropriate fund will be
automatically selected based on
your age.
If you prefer to keep an active
eye on your investment, you can
go for Do-It-Myself option.
Each fund is managed
differently according to its

objective and characteristics.

You can leverage on CIMBPrincipals global experience and
disciplined portfolio construction
with a systematic in-depth review
process.

l Ethical investment with PRS

CIMB-Principal has one of the
largest range with five syariahcompliant funds. It also has five
conventional funds, making it 10
in total.
The CIMB Islamic PRS Plus
provides an end-to-end syariahcompliant scheme, so there is
something for everyone.
l PRS for employees is not
simple and straightforward
CIMB-Principals PRS Plus Partner
programme comes with valueadded services such as customised
enrolments sessions according to
staff profile to explain the benefits
of PRS, besides the payroll
assistance, year-long top-up
opportunities, assistance in fund

holistic benefits package, which

can have a real impact on
workforce engagement and talent
retention.
While many companies are
focusing on having succession
plans and personal development
programmes to manage the
increased competition for talents,
only a few are re-assessing their
strategies to use employee benefits
such as PRS as an attraction and
retention tool and as part of
employer branding.
There are various ways for
employers to offer PRS to their
employees. The quickest way
possible is to set up the payroll
system to facilitate contributions
from employees through monthly
salary deduction.
Not only do employers have the
flexibility to match contributions
by their employees, they can
customise it as well to honour
achievements by an individual
employee or department.
This doubles the total
contribution amount by an
individual employee, which means

Private
Retirement Scheme

Do-It-For-Me

more contributions that directly

result in more funds being put
towards a comfortable retirement
and an increased possibility of
bigger returns.
Besides that, employers could
also optimise their tax relief of 19%
for employee remuneration.
Since most companies only
contribute 12% for EPF, they can
contribute another 7% to take
advantage of this tax relief.
In essence, retirement plans
such as PRS contribute effectively
as a staff retention tool,
particularly among younger
employees.
Many employers have only
recently begun to understand
how important their role is in
advocating the benefits of PRS for
employees and what they can do to
encourage participation.
This is a win-win situation for
employers and employees, which
ultimately creates a sustainable
ecosystem conducive to pensioners
to support the goals of the
nations ageing population for a
comfortable retirement.

CIMB-Principal
PRS Plus

CIMB Islamic
PRS Plus

> 50 years

CIMB-Principal
PRS Plus
Conservative

CIMB Islamic
PRS Plus
Conservative

> 40 years
<50*

CIMB-Principal
PRS Plus
Moderate

CIMB Islamic
PRS Plus
Moderate

> 40 years*

CIMB-Principal
PRS Plus
Growth

CIMB Islamic
PRS Plus
Growth

CIMB-Principal
PRS Plus
Equity

CIMB Islamic
PRS Plus
Equity

CIMB-Principal
PRS Plus Asia
Pacific Ex Japan
Equity

CIMB Islamic
PRS Plus Asia
Pacific Ex Japan
Equity

Do-It-Myself

* Should an individual become a member and make his first contribution

to the scheme a month before he turns 40 or 50 years old, CIMB-Principal
will allocate the contribution to the CIMB-Principal PRS Plus Moderate or
CIMB-Principal PRS Plus Conservative.

selections and direct access to

investments through a toll-free
number for any PRS-related
enquiries.
With CIMB-Principals PRS Plus

Partner Programme, employees

are not only able to invest at net
asset value but also enjoy peace of
mind as their investments in PRS
are creditor-protected.

SUNDAY STAR, 17 JULY 2016

SUNDAY STAR, 17 JULY 2016

10 planning your retirement

By RACHEL PUNITHA
LIVING off your savings without an
income can be a very frightening
notion, spurring some to work
even harder to earn money.
The reality does not get any
better when you are finally retired
and your ability to earn a living
has decreased significantly.
Life expectancy in Malaysia now
stands at 74.75 a good 15 years
post-retirement, which is pinned at
60.
It is hard from this side of the
equation to fully grasp how long
the retirement years will actually
be, more so in this day and age
where we are living significantly
longer. In the 1950s, life
expectancy stood at 54.8 for
Malaysians and a mere 38.3 for
neighbouring Indonesia.
Needless to say, retirement years
were not very long then and the
concept of retirement as it stands
has crept up on us. In fact, life
expectancy in many parts of the
world stands in the 80s.
As much as a longer lifespan is
something to be thankful for, are
we preparing wisely for reduced or
no income, whether it is by living
off our savings, cashing in on
bonds or redirecting our
investments? Whatever the
scenario, decisions pertaining to
them need to be made today.
Depending on your age,
retirement could be within your
immediate or near future. Here we
look at some of the areas that you
need to address in preparation for
your retirement.
Less than 15 years away
(45 years old and above)

Investments and the

Employees Provident
Fund (EPF)
For private and non-pensionable
public sector employees, EPF is the
mandatory savings for retirement
and typically the funds that many
rely on for retirement.
However, because EPF provides
many options to lessen the
financial burdens of their
members, including housing,
education and soon-to-be available
health withdrawals, there is the
possibility that having exhausted
all these options, your EPF balance
may not be as healthy as you hope
it to be when you reach 60.
Therefore, now that retirement
is less than 15 years away for you,
be wise as to how you use your
EPF funds.
An option would be to talk to
EPF on withdrawals and your
options or speak to a professional
about managing your funds.
Bryan Zeng, general manager
and licensed financial planner of
FA Advisory Sdn Bhd and a
certified member of The Financial
Planning Association of Malaysia,
strongly advises against spending
EPF money.
He recommends employees
discuss with their employer the
possibility of increasing the
employers contribution rate in
place of a salary increment.
This way, you will be saving
more towards your retirement

Take the right steps now

without incurring higher taxes.
There are also ways for
investments to be made with your
EPF funds and for the interests to
be chanelled back into your
retirement accounts.
Therefore, seek expert advice to
ensure your funds are worked to
achieve their full potential.

Family support
Family is an invaluable asset that
can be tapped into. If you have a
spouse, look at how you can
stagger your retirements so that
your family will not suffer the loss
of a double income within a short
period of time.
Moreover, you can supplement
your income with part-time and
casual work. The trick at this stage
would be to create as much cash
flow as possible that can be saved
or reinvested.
It would also be a good idea at
this point to enlist your childrens
help. Would they be able to commit
to a monthly contribution or be
open to caring for you under the
same roof when you retire?
Retirement is a family matter and
should be addressed together.

The value of homes

More than just a roof over your
head, your home is where a large
part of your expenses would go to
even after retirement, especially if
your house loan is still being paid
off.
An option to consider is to
trade in your current home for
something easier to maintain that

Employees should
discuss with
their employer
the possibility
of increasing
the employers
contribution rate
in place of a salary
increment.
This way, you will be
saving more towards
your retirement
without incurring
higher taxes.
Bryan Zeng

comes with just the necessary

security and facilities.
According to this years
retirement index by International
Living, Malaysia is in the list of the
top 10 best countries to retire,
alongside Panama, Ecuador,
Mexico, Spain and Portugal,
scoring high on entertainment,
amenities, healthcare and buying
and renting.
Another option to consider
is retirement villages such as
GreenAcres by TI Homes in Ipoh,
which are aimed at improving the
quality of life for seniors.
They meet the changing needs
of the elderly, enrich lives and
renew vigour within a specially

designed environment.

Covered for healthcare

The Health Ministry reports that
the average individual spending on
health in 1997 was at RM629.
This figure rose steadily and in
2012, average per capita spending
on health stood at RM1,433.
Moreover, out of the
RM42,309mil that was spent on
healthcare in 2012, 37% was out of
pocket this includes both public
and private sectors.
Out of the RM19,795mil that
was spent in 2012 for private
healthcare, a whopping 79% was
out of pocket.
Ensure that you are well-covered
in terms of medical insurance with
necessary protection for your age
and specialists you would need.
The best way to prepare for an
impending expenditure on
healthcare is to make small but
significant lifestyle changes.
Zeng suggests maintaining a
healthy lifestyle and eating well,
which can reduce the number of
hospital trips or intensity of
medical care later on.
Dont rob yourselves of a
meaningful, healthy retirement.

Redefining retirement
As a progressive result of longer
lifespans, more people are able to
actively contribute financially after
the official retirement age of 60.
This inadvertently increases
your ability to save more, allowing
more time for your funds to
generate returns and delaying the

depletion of your resources.

So ask yourself these questions:
Do you want to work in your
retirement years? If yes, then in
what capacity? Would you like to
be doing full-time or part-time
work or engage in casual or
contractual work?
Retirement does not mean
isolation consider the options that
will bring you fulfilment without
depleting your finances.
Society can still benefit from
your skills and decades of working
experience. If money is going to be
an issue, ask yourself how you can
exercise, travel or even purchase
things economically.
Depending on your actions, these
15 years can be the best investment
for your retirement years or a
downhill road to not-so-golden
years each moment counts.
More than 15 years away
(45 years old and below)

Investments: Sow now,

reap later
The biggest issue with having a
long way to retirement is being
nonchalant about it, causing many
to believe that Once I have a
million dollars, I can retire or I
just have to buy and sell my first
property or Ill wait until my
bonus/big pay-out/project starts
raking in before doing
investments.

> SEE NEXT PAGE

SUNDAY STAR, 17 JULY 2016

planning your retirement 11

Ready,
set,
grow

Capitalising
on youth

> FROM PREVIOUS PAGE

Rather than focusing on the big
prize, we should direct our effort
and thoughts towards the small
steps that take us there such as
putting aside a little bit of money
now to invest. You do not have to
wait until you reach a grand
amount of money before choosing
to invest. Many investment
schemes such as the private
retirement schemes (PRS) can start
from as low as RM50 per month.
There are eight licensed PRS
providers in Malaysia and they
do syariah schemes as well.
These PRS providers are Affin
Hwang Asset Management
Bhd, AIA Pension and Asset
Management Sdn Bhd, AmFunds
Management Bhd (AmInvest),
CIMB-Principal Asset Management
Bhd (CIMB-Principal), Kenanga
Investors Bhd (KIB), Manulife Asset
Management Services Bhd
(MAMSB), Public Mutual Bhd and
RHB Asset Management Sdn Bhd.
In terms of EPF, there is an
option for you to set aside a certain
portion from your Account 1 to be
put towards investment.
Any dividend earned is put back
into your Account 1. This way, even
your EPF money is being put to
work.
This is the age where you can
afford to take bigger risks with
your money, something you will
not be able to do once you are
much closer to your retirement.
Seek professional help to assess
your finances and figure out your
next move.

Become debt-free
Reduce your debt as much as
possible and as quickly as possible,
starting with debts that have
higher interest rates.
Ideally you should retire debtfree, but in the current low-interest
rate environment, you can plan to
have some low-interest debts in the
early years of your retirement
provided you have post-retirement
income to pay off the monthly debt
repayment, says Zeng.
However you go about it, it
should be about minimising risks
and maximising returns.

Make it a family
thing
Try to coordinate your childrens
tertiary study years and their
income-contributing years to tie
in with your retirement plan.
If non-ideal circumstances are
inevitable (meaning, you still need
to provide education for your
children even at retirement age),
delay your retirement to give time
for your children to become
established in their careers.
It is best to lay the groundwork
now by talking to your children
about your expectations Do you

Regardless of your age, now is always the best time to start planning for
your retirement.

expect them to take care of you

and live together once you are
retired?
Aim to make collective decisions
that everyone can agree on and
ensure all situations are accounted
for. For example, if you wish to
send your children overseas, you
can request for them to contribute
towards your retirement when the
time comes.
Another family-related option is
for a spouse to run his or her own
business, which is a good option if
you have enough disposable
income and if you are at a good
age to take the risk.
Hence, if the business plan does
not work out, your backup plan
would be to take up employment
again.
Seek help in clarifying the state
of your finances and money health
as it will aid in making the right
choices that will impact your
retirement goals in the long run.

Property as an
investment
A smart way to put your money
to work is to buy a second
property. An option is to invest in
low-cost units where rental rates
are high.
Urbanites used to fancy living
may avoid them, but they can
prove to be an effective cashgenerating tool.
Moreover, it can typically be
sold off at a much higher price if
market conditions are favourable,
providing you with a large sum to

invest elsewhere.
And at the end of the day, it can
be your backup home once you
retire and want to live elsewhere.

Live the right

lifestyle
Decide on things that are
healthy not only for yourself but
for your pocket and bank balance
as well. Search for resources and
ideas that will indirectly invest
back into you.
Reading, volunteering, exercising
or engaging in an inspiring hobby
are some of the ways.
By ceasing habits that will hurt
your pocket or your bank balance,
you can possibly reap your
rewards much sooner than you
think.
Plus, these renewed habits and
healthy balance will tremendously
enhance your retirement years.
Retirement is not a national or
state matter it is a personal
journey, not to be shelved or
handled carelessly care.
No matter what age you are at,
there is always something that
can be done. Take a good look at
your finances, consider your
retirement goals and weigh your
commitments.
Your retirement goal does not
have to remain a dream, whether it
is living in a foreign land or
working on your passion in life.
You alone have the power to
create the retirement life you will
truly value, as long as you begin
now.

SINCE young people everywhere

are increasingly changing the
way things are done, why not
apply some creative steps in
raising money for your nest egg?
Here are a few ways you can
do this:
l Transform You may be
familiar with insurance for your
car, health and travels, but did
you know there are insurance
plans that involve investments or
that there are also endowment
plans with an element of
insurance? These can be
especially useful in growing your
worth, especially if you are
young.
Investment-linked insurance
plans that combine protection
and investment elements can
help you build a solid fund if
you start in your 20s.
This is how it works: part of
your premium payment will be
channelled into specific
investment funds and you will
have control over the type of
funds that suits your risk
appetite.
If you are just beginning to
build your nest egg, you would
most probably opt for a monthly
or quarterly premium plan. You
may increase your premiums
and coverage as you earn more
and stabilise your finances.
Benefits of investment-linked
plans include a cheap entry cost
from as low as RM100 monthly;
an all-in-one starter pack plan
that covers investment, death,
disability and possibly
hospitalisation (depending on
what riders are added);
professionally managed funds
that make it possible for the
inexperienced to invest, tax
benefit on the insurance part of
the policy, and the opportunity to
withdraw funds after some time
without compromising the
insurance.
Endowment plans are fixed
term savings/investment plans
that pay out a lump sum or
certain amounts after a specific
term.
They typically mature over 10
to 30 years, and therefore, are
great for those in their early 20s.
Advantages of endowment
plans include a low risk as it
does not follow stock market
fluctuations, forced savings as
you are required to pay
premiums for a certain amount
of years and tax-free returns
when withdrawn.

Research the insurance

companys offerings and track
record before you commit.

l Collect Certain collectibles

have the potential to appreciate
in value over the years, creating
a small fortune for owners with
patience and foresight.
Classic cars, fine art, antique
furniture and rare coins are
among the most valuable luxury
collectibles in the world, but
these items are rather exclusive
to wealthy individuals or those
who inherit family heirlooms.
Sports memorabilia, game
cards or comic books, however,
are some more common options
that could become more precious
as they age.
Take the case of Jonathan Ross,
a BBC reporter who in 2009
auctioned an original copy of The
Amazing Spider-Man for British
charity Comic Relief at 40,000
(RM209,098 at current exchange
rate). He spent a year tracking
down the comic, which cost 12
cents when it was released in
1962.
If you play your cards right,
items that hold personal nostalgic
value can double as long-term
investments.
In order to reap benefits from
your collections, though, you
must know your items well to be
able to eliminate imitations and
ascertain those that have high
potential for value appreciation.
Some items reach their peak
value before others, so you must
give your collection up at the
right time.
l Create Your ideas are
valuable, so why not make your
passion work for you? Whether it
is making art, music, apparel or
food, your creations can be
marketed on any scale you are
comfortable with, thanks to the
reach of social media sites and
online stores such as etsy.com.
If you write well or take good
photographs, you can create a
profile of your work on websites
such as clippings.me or
behance.net. These tools make it
feasible for creative professionals
to showcase their products and
attract customers.
By cashing in on your trade or
even hobby, you will be able to
create a supplementary source of
income and this money can be
put away for your future or for
further investment.

SUNDAY STAR, 17 JULY 2016

12 planning your retirement

Retirement reality check

My EPF savings are adequate

I will spend less

5 This is a common myth among

many the notion that there will be
less expenditure involved as you age
and you will be disciplined in
managing your funds after retirement.
Unfortunately, that is not always the
case. As we grow older, we are more
prone to illnesses and this could put a
dent on retirement savings.
Treatment for age-related diseases
and illnesses are not cheap and the
cost of treatment increases every year.
It is estimated that the rate of medical
cost inflation in Malaysia increases
between 10% and 15% annually.
Your retirement life should not be
limited to staying at home and living
on a budget. With effective planning
and savings, you can create
opportunities to travel or make
purchases you have always wanted.

2 Your EPF (Employees Provident

Fund) is a great safety net when it
comes to saving for your retirement.
However, many fail to realise that it is
the most basic saving scheme for your
retirement. Your EPF alone is not
enough to support you when you retire.
The growing inflation rate has stirred
concerns among many as this could
signal an increased cost of living in the
future. Hence, the need for more cash,
especially in the case of an emergency,
is necessary. Investing in private
retirement schemes (PRS) are avenues
to expand your retirement fund to be
better prepared.
To further encourage Malaysians to
save more for their retirement, the
Inland Revenue Department of
Malaysia has granted tax relief of up to
RM3,000 for annual PRS contributions
for a period of 10 years, ending 2021.
Do your research and find the best PRS
scheme that suits your needs and
financial capability.

$
5

our
Saveonyey!
M

6 Children have an impact on their

parents retirement. It is customary in
many Asian cultures that children take
care of their retired parents.
Although this trend has been
prevalent in past generations, there
has been a shift in this culture due to
changes in lifestyle, career building
and family planning.
Many parents these days would still
need to support their young children
even after retirement in terms of
education and living costs as many
tend to start a family at a much later
age compared to their parents and
grandparents.
On the other hand, the growing cost
of living also puts a damper on the
income of young adults, making it
difficult for them to save for
themselves and contribute to their
retired parents.

My children will support me

3 The word retirement often

paints a picture of you and your
spouse living a relaxed life. However,
many retirees these days are
semi-retirees who do part-time jobs to
earn some money and stay active.
Many retirees these days are not
used to sitting at home but prefer to
work to stay mentally and physically
active. It is important to note that it is
difficult to completely rely on your
part-time earnings to support you
financially but with the right financial
planning, your side income would be
able to supplement your retirement
savings.
Alternatively, potential retirees can
enhance their retirement experience
by starting a business, picking up a
hobby or enrolling in a graduate or
postgraduate course.

I will stop working

FOR some, retirement is a time to kick back and relax from building a career while for others, it is a time to
reconnect with themselves and spend quality time with loved ones.
The real retirement challenge begins long before your golden years. Here are some myths about retirement
planning and a few tips on how you can enhance your retirement saving efforts.

Retirement planning
1 can
wait

It is easier to take things for granted

when you are still enjoying your
youth. Whether it is splurging on your
favourite artisan-handcrafted caf
latte or the latest fashion trend, saving
and retirement planning is likely the
last thing on your mind.
Whether you are a fresh graduate
working your first job or just short of
20 years before retirement, it is never
too early to begin planning even when
the statutory retirement age in
Malaysia is 60.
You also get more value for your
ringgit through long-term savings due
to compounding interest. Hence, your
returns are much higher than the
amount saved in the end.

My property will cover me

4 Many retirees rely on property

and assets as back-up retirement
funds that they can liquidate when the
need arises. The property market can
be extremely volatile, especially when
there is an economic slowdown and
this could severely affect your
long-term retirement plan.
It would also be difficult to predict
property prices if you would like to
buy a property after retirement. With
prudent financial and retirement
planning, you can enjoy your
retirement in a comfortable home
without any hassle.
However, if you have already
invested in a secondary property,
consider supplementing your
retirement fund by renting it out. This
way, you can also sustain yourself with
the monthly rent payment as a
secondary source of income.