KUALA LUMPUR: The Malaysia government would like to see citizens saving more and having larger pensions. One of those new efforts being promoted by the government is the option of putting pension money in Islamic banks.
New regulations are allowing the Employees Provident Fund (EPF) to give those with pensions the option of putting portions, not all, of their pension into Islamic Sharia-compliant areas including sukuk and halal stocks.
They have a limited amount of funds to work with, some 20 percent of their full EPF can go into one single mutual fund.
Under the new, voluntary Private Retirement Scheme (PRS), which will not replace the EPF but supplement it, contributors will be able to allocate money to a wide range of products offered by private-sector fund management firms. This will allow them, if they choose, to target sharia-compliant investment – potentially increasing the amount of money going into Islamic instruments, Reuters news agency reported in detailing the new option
The scheme’s governing body which will oversee how the fund managers operate, the Private Pension Administrator (PPA), was officially launched last week.
“PRS will contribute towards the growth of Islamic fund products,” Zakie Ahmad Shariff, board member of the PPA and chief executive of the Federation of Investment Managers Malaysia, told Reuters.
The initial rollout of 30 PRS products will include 6 Islamic funds, he added.
“Early adopters will have much to gain – especially for the Islamic players,” said Mahadzir Ahmad, a wealth management consultant and an instructor at the Financial Planning Association of Malaysia.
(Bikyamars / 24 July 2012)
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