PRS and Anuity Comparison

Private retirement scheme	Deferred Annuity
Security Commision	Bank Negara Malaysia
Unit Trust Companies - already have 4 or 5 rolled out, Personally I bought Hwang DBS	Insurance Companies - So far only great eastern offer
No fixed amount and interval - I will bank in December of each year	Fix amount and interval
Estate freezing if you mati - Hope i won't mati before 55 years old else susah loh	No estate freezing, nomination is enough
3 k tax relief for 10 years	3 k tax relief for 10 years

Private Retirement Scheme and Deferred Annuity. We can see that these two categories share the same RM3000 tax relief.

The Private Retirement Scheme is governed under the Security Commission, whereas the Deferred Annuity is governed by Bank Negara Malaysia.

PRS is offered by Unit Trust Companies, whereas Deferred Annuity is offered by Insurance Companies.

With PRS, there are No Fixed Amount of intervals or term of contribution. Here you can put in whatever amount at any time you wish – there’s no fixed amount of interval. For example, let’s say you want to skip one or two years. It doesn’t matter. Whereas for Deferred Annuity, once you fixed the amount, let’s say RM3000 a year, you will have to put it aside for ten years once you decided on it. This, of course, depends on how much or how far you would like to enjoy the tax relief.

Another difference is that the capital not guaranteed if you place your money in the Equity Funds. On the other hand, with Deferred Annuity, annual income is guaranteed.

For PRS many parties are involved: you have a Private Pension Authority, you have the PRS Provider which is a Unit Trust Company, and you also have the Scheme Trustee. This is because the government want the Unit Trust Company to make sure that the trust fund is in good hands. For Deferred Annuity, only the insurance company is involved, which is governed by Bank Negara.

With PRS, the money is subjected to estate freezing. When the money falls into estate after a person dies, you’ll need to bring a GP (Grand of Probate) or LA (Letter of Estate Administration) to unfreeze and withdraw money. 

With Deferred Annuity you will just need to do a nomination. As it will not be frozen if nomination is done properly, there is no need to bring GP, run a probate, or LA to withdraw money.

Which one is better? PRS or Deferred Annuity plan? It depends on the customer and how he or she wants to make use of the tax relief.

Source: http://kclau.com/retirement/prs-da

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