In Malaysia, parents face the daunting task of preparing for their children’s future, especially their education. This preparation is increasingly challenging because of evolving financial landscapes and the need for substantial savings. Yet, many Malaysian parents are likely to be struggling in this aspect as their children grow and enter tertiary education.

At The Edge Malaysia’s Retirement Reimagined Forum 2023 in October, then CEO of the Employees Provident Fund (EPF) Datuk Seri Amir Hamzah highlighted that a staggering 40% of Malaysia’s labour force, or 6.1 million people, are not covered by formal legislation for pensions and retirement. The implication is that a significant portion of the population, especially informal workers, are without a safety net for their children’s education.

Recent findings by the EPF further highlight a significant gap in financial preparedness among Malaysians. For instance, only 16.4% of EPF members aged 50 to 54 have savings above RM240,000. With this amount, their projected monthly income stands at merely RM1,000 over the next 20 years — assuming a disciplined spending pattern as opposed to lump-sum withdrawal and spending upon retirement — casting doubt on the adequacy of these funds for their children’s education needs.

In response to these increasingly challenging hurdles, the National Higher Education Fund (PTPTN) has evolved its signature savings products. SSPN-i has been strengthened into the Simpan SSPN Prime scheme, while SSPN-i Plus has been reformed into Simpan SSPN Plus. It is a timely and critical change to these products, which had been offered since 2004 to assist parents in planning their finances for their children’s higher education.

In line with PTPTN’s First Strategic Pillar of the 2021-2025 Strategic Plan, Simpan SSPN Prime retains its existing advantages and benefits. Meanwhile, Simpan SSPN Plus now offers enhanced takaful benefits, making it an attractive choice for higher education savings and establishing a strong brand trust.

Simpan SSPN Prime provides multiple benefits such as:

• Up to RM8,000 in income tax relief on the current year’s net savings;

• Free takaful protection for deposits of RM1,000 and above;

• Competitive dividends;

• Matching grant of up to RM10,000 for eligible families;

• Government-guaranteed savings; and

• Eligibility to apply for PTPTN education loans.

Simpan SSPN Plus, similar to Simpan SSPN Prime, offers additional takaful benefits through partnerships with three takaful companies — Hong Leong MSIG Takaful Bhd, Great Eastern Takaful and Takaful Ikhlas Family Bhd. These additional benefits include:

• Takaful protection of up to RM1.2 million;

• Terminal illness benefit up to RM200,000;

• Repatriation of mortal remains up to RM10,000;

• Outpatient treatment claim due to an accident up to RM3,000;

• Death benefit for depositor, spouse and up to five children;

• Critical illness takaful benefit;

• Hospital admission allowance;

• Takaful protection until the depositor reaches age 69;

• Commitment as low as RM30 per month; and

• No health examination required for certain packages.

“Parents should consider Simpan SSPN, as it not only offers competitive returns but also crucial protection plans,” says PTPTN, emphasising the scheme’s dual benefits of earning potential and financial security.

The success of Simpan SSPN is further highlighted by its rising investment returns and shariah-compliant investment methods, both short and long term, in the local money market, ensuring principal protection while offering high and positive returns.

In 2022, Simpan SSPN depositors saw a 3.05% dividend rate plus a 1% loyalty dividend, an improvement over 2021. This is anticipated to grow further, making the scheme an even more attractive option for savers.

In 2023, PTPTN reported a significant return on Simpan SSPN investments, indicating a strong performance and promising future prospects. This remarkable return, amounting to RM287.64 million for the period from January to September 2023, represents an improvement from RM220.63 million recorded in the same period in 2022.

“Simpan SSPN is a testament to our dedication to helping Malaysian families secure their children’s educational future,” says PTPTN, reinforcing the scheme’s role in national education planning.

Indeed, with the unique tax relief benefits through Simpan SSPN products, depositors are enjoying more returns than the dividend rates on paper.

The Simpan SSPN scheme stands out as the only savings plan in Malaysia offering a tax relief of up to RM8,000 per year. There are two categories of eligibility for this tax relief: individual assessment, which allows each spouse to claim up to RM8,000 per year; and joint assessment, offering a maximum tax relief of RM8,000 per year for a couple. In addition, if the depositors (husband and wife) opt for individual tax assessments, they can open separate accounts for the same child, enabling each parent to enjoy tax relief of up to RM8,000 each.

Moreover, parents who save under the Simpan SSPN Plus are eligible for an increased tax relief of up to RM11,000 — RM8,000 for net savings in Simpan SSPN Plus and an additional RM3,000 for takaful contributions. Depositors who opt for the retirement scheme can enjoy even higher tax relief, up to RM15,000, comprising RM8,000 for net savings in Simpan SSPN Plus and RM7,000 for takaful contributions.

This unique tax incentive structure of the Simpan SSPN scheme not only enhances the benefits for parents saving for their children’s education but also aligns seamlessly with their financial planning, making it an attractive and practical option in the current economic landscape.

In today’s economy, where financial uncertainty is a constant, the importance of a reliable and beneficial educational fund cannot be overstated. Investing in Simpan SSPN equates to investing in a child’s future, providing them with opportunities for success and growth.

From a nation-building perspective, as Malaysia progresses, the need for educated future generations becomes more critical. By 2056, at least 20% of Malaysia’s population is expected to be aged 65 and above. Simpan SSPN supports this vision by enabling parents to effectively save for their children’s education, preparing for a future in which a significant portion of the population will be elderly.

In Simpan SSPN, Malaysian parents find a beacon of hope and security — a pathway to fulfilling their children’s educational dreams and ensuring their future success, in a landscape where traditional financial safety nets are increasingly unreliable. The foresight in choosing the right saving plan such as Simpan SSPN becomes imperative, as it empowers parents to take proactive steps towards securing their children’s educational and financial future.

Therefore, PTPTN encourages everyone in Malaysia to start saving in Simpan SSPN before Dec 31, 2023. By doing so, you can get a special tax break to reduce your income tax by up to RM8,000 for the 2023 tax year. This tax break has been extended to the 2024 tax year.

You can easily open a Simpan SSPN account or add more to your savings online through the myPTPTN app. It’s a quick, safe and convenient way to save. For more information, visit PTPTN’s official website at www.ptptn.gov.my.