If you’re earning a salary and contributing to EPF every month, that’s a great start. But here’s a question worth sitting with: is EPF alone enough to retire comfortably?
As of end-2025, around 58.8% of formal sector EPF members hadn’t yet reached the minimum savings level needed for a sufficient retirement. And according to EPF’s Belanjawanku guide, a single elderly person needs approximately RM2,690 per month just to maintain a reasonable standard of living in retirement.
That gap is exactly why PRS exists.
👉 What is PRS?
The Private Retirement Scheme (PRS) is a voluntary investment scheme initiated by the government to help Malaysians accumulate savings for a sustainable retirement income. It aims to provide both employees and self-employed individuals with an additional avenue to save for retirement.
Think of it this way — EPF is your foundation, PRS is what you build on top of it.
👉 How does it work?
Your PRS contributions are automatically split 70:30 between two sub-accounts. Sub-Account A (70%) can only be withdrawn at retirement age (55 years old), upon death, or if you permanently leave Malaysia. Sub-Account B (30%) allows one pre-retirement withdrawal per year, but you’ll face an 8% tax penalty unless it’s for housing or healthcare purposes. Once you reach 55, you can withdraw from both accounts without penalties.
👉 The tax relief — this is the part people often miss
You can enjoy up to RM3,000 per year in personal tax relief on PRS contributions, on top of the separate RM4,000 per year relief for EPF. Depending on your tax bracket, this could mean savings of up to RM840 per year. This tax relief has been extended until the year of assessment 2030, announced in Budget 2025.
So every ringgit you put in does two things at once — it grows for your retirement, and it reduces your tax bill today.
👉 Who should seriously consider PRS?
PRS makes a lot of sense if you’re:
- A salaried employee who wants to reduce your income tax and save more at the same time
- Self-employed or a business owner with no mandatory EPF contribution — PRS gives you a structured way to build retirement savings
- Someone in your 40s or 50s who feels like retirement is coming faster than expected, and wants to close the gap
- Anyone who’s already maxed out EPF and insurance contributions and wants another tax-efficient savings bucket
👉 One thing to keep in mind
Unlike EPF, PRS returns are not guaranteed. Your money is invested in funds, and performance depends on the market and the fund you choose. That said, you do get flexibility — you can choose a fund that matches your risk appetite, whether that’s growth-oriented or more conservative.
If you’re approaching 55 and wondering whether it’s too late to start — it’s not. Even a few years of contributions can add up, especially when the tax relief is working in your favour.
Disclaimer: The content shared here is for general information and educational purposes only. It does not constitute financial, legal, or tax advice, and should not be relied upon as such. Everyone’s financial situation is different — if you have specific questions or needs, feel free to reach out for a personalised consultation.