KUALA LUMPUR (March 9): The Securities Commission Malaysia (SC) is reviewing the structure of the country’s private retirement scheme (PRS) to give individuals greater control over how their retirement savings are invested.

The regulator plans to explore enhancements to the PRS account framework, including allowing contributors more direct access to a wider range of asset classes to improve their choice of product that can help them achieve long-term retirement goals, according to its fourth Capital Market Masterplan 2026-2030 (CMP4) launched on Monday.

“Legislative amendments may be required to ensure that administrative and operational requirements do not impose excessive costs,” the SC said in the report. Transparency on product fees, performance and other information will help investors track outcomes, assess value and make informed long-term decisions,” the regulator added.  

PRS is a scheme designed to supplement retirement savings held in the Employees Provident Fund (EPF), Malaysia’s main mandatory pension system.

Overall, the SC said the aspiration is for investors to benefit from a Malaysian retirement investment account framework for individuals, which allows access to a wide range of securities. These could include domestic and foreign equities, bonds and sukuk, collective investment schemes, equity crowdfunding, peer-to-peer financing, venture capital and private equity funds, as well as digital assets.

Introduced in 2012, Malaysia’s PRS industry has seen its net asset value grow to RM8.8 billion from RM4.8 billion 2020.

At the same time, the country faces mounting pressure to improve retirement preparedness. Malaysia’s net pension replacement rate — the proportion of income retirees receive compared with their pre-retirement earnings — stands at around 43%, significantly below the Organisation for Economic Co-operation and Development (OECD) average of 60% to 70%, according to the report.

This is particularly concerning as Malaysia is undergoing a major demographic transition toward becoming an ageing nation. The proportion of Malaysians aged 65 and above is projected to more than double, from 9.3% in 2030 to over 18.3% by 2060.

The SC also plans to facilitate algorithm-based portfolio management solutions, or electronic PRS (ePRS), which would be offered by digital investment managers.

“These algo-based schemes operate completely online via mobile apps to facilitate greater customer interaction and they typically do not impose commissions,” the report noted.

In addition, SC emphasised on the need to encourage Malaysians to begin retirement planning earlier in their working lives. To support this, it plans to streamline enrolment processes to make it easier for individuals to start contributing to retirement products.

“This will be complemented by a range of support measures and ‘kick-start’ mechanisms to promote early participation,” the report said. Efforts will also focus on improving the user experience for managing retirement savings.

Industry bodies such as the Private Pension Administrator Malaysia (PPA) and the Federation of Investment Managers Malaysia (FIMM) are expected to play a key role in enhancing portability and withdrawal processes, while supporting the development of more intuitive digital platforms.

The introduction of behavioural design features such as auto-enrolment, smart defaults and nudges will be explored with employers and private pension providers, it added.

Click here for all you need to know about the Capital Market Masterplan 2026-2030.