PRIVATE RETIREMENT SCHEME: An Academic & Shariah Perspective

PROF. DATUK DR. SYED OTHMAN ALHABSHI

6th September 2012 MFPC & FPAM Financial Planning Seminar 2012 Bukit Kiara Equestrian & Country Resort

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CONTENTS

Introduction What is PRS The Associated Advantages Caution On Some Risks Involved Some Shariah Issues and Challenges Conclusion

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CONTENTS

Introduction What is PRS The Associated Advantages Caution On Some Risks Involved Some Shariah Issues and Challenges Conclusion

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INTRODUCTION
The need to plan for retirement Everyone grows older Need to work hard when young to accumulate as much wealth for old time sake Costs of living escalates every decade Major cost is medical

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INTRODUCTION (Contd)
If my body was a car, this is the time I would be thinking about trading it in for a newer model. I've got bumps and dents and scratches in my finish and my paint job is getting a little dull... But that's not the worst of it.

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INTRODUCTION (Contd)
My headlights are out of focus and it's especially hard to see things up close My traction is not as graceful as it once was. I slip and slide and skid and bump into things even in the best of weather. My whitewalls are stained with varicose veins.

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INTRODUCTION (Contd)
It takes me hours to reach my maximum speed. My fuel rate burns inefficiently. But here's the worst of it. Almost every time I sneeze, cough or sputter, either my radiator leaks or My Exhaust Backfires! What do you think would happen if you dont plan for retirement? Retirement is not just to sit around doing nothing, but you must have an active and healthy quality life, not sickly boring life

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INTRODUCTION (Contd)
The Role of compulsory Pension funds Basically to provide funds for retirement You only get what you save You can enhance it when you invest You should plan not only for your current but also your future needs More than often, the EPF is not sufficient if not well planned

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INTRODUCTION (Contd)
The need for other pension schemes PRS is one Can also take up good investments in various investment schemes, such as unit trust, real estate, etc ASN, ASB, etc. Gold bars Should also think of insurance and takaful

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CONTENTS

Introduction What is PRS The Associated Advantages Caution On Some Risks Involved Some Shariah Issues and Challenges Conclusion

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WHAT IS PRS?
A voluntary pension scheme Forced savings for the future that suits individual needs Well regulated to avoid any unfair dealings

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CONTENTS

Introduction What is PRS The Associated Advantages Caution On Some Risks Involved Some Shariah Issues and Challenges Conclusion

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THE ASSOCIATED ADVANTAGES

Possibility of growth in the fund because of the large scale Allows planning and management of funds for the future needs Good for employers to retain talents Supports better quality of life

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CONTENTS

Introduction What is PRS The Associated Advantages Caution On Some Risks Involved Some Shariah Issues and Challenges Conclusion

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CAUTION ON SOME RISKS INVOLVED

The fund is subject volatility of the capital market It does not pay to be greedy It is better to have small returns than chasing for higher but very risky returns

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CONTENTS

Introduction What is PRS The Associated Advantages Caution On Some Risks Involved Some Shariah Issues and Challenges Conclusion

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SOME SHARIAH ISSUES AND CHALLENGES Shariah compliant investments Distribution upon death subject to Faraid Should consider zakat payment Be helpful to others when you can

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CONTENTS

Introduction What is PRS The Associated Advantages Caution On Some Risks Involved Some Shariah Issues and Challenges Conclusion

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CONCLUSION PRS is an excellent avenue for personal financial planning It provides opportunities for better quality of life at retirement

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THANK YOU

Q&A

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Prof Datuk Dr Syed Othman Alhabshi Chief Academic Officer

Tel: +603 7651 4000 soalhabshi@inceif.org Email: Website: www.inceif.org

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