ExamFinch.com My Study

Study guide

7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities

Practice this exam

FIMM Combined Examination FCE

Track your progress as you read

Finished sections get a check mark.

1 Introduction: The FIMM Combined Examination (FCE)

0.1 FCE Exam Facts, Registration Rules and How to Use This Guide

2 Chapter 1: Understanding Collective Investment Schemes in Malaysia

1.1 What a Collective Investment Scheme Is and How Malaysian CIS Are Classified 1.2 Investment-Linked Funds Are Not UTS; Industry Growth and History 1.3 Participants in the CIS Ecosystem: Unit Holders, Managers, Trustees, Distributors and Regulators

3 Chapter 2: Introduction to UTS and PRS

2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare 2.2 Types of Funds: By Asset Class, Fund Structure and Investment Objective 2.3 Methods of Investing and Dollar Cost Averaging 2.4 Benefits and Disadvantages of Investing in UTS and PRS 2.5 Understanding Risk and the Risks of Investing in Schemes 2.6 Shariah-Compliant Schemes, Their Risks and the Role of the Shariah Advisory Council

4 Chapter 3: Regulatory Framework

3.1 The Regulatory Framework: The SC, Other Regulators and FIMM's Dual Role 3.2 Legislation, SC Guidelines and FIMM Rules Governing UTS and PRS 3.3 Regulation of Scheme Providers and Oversight Functions 3.4 The Deed, the Prospectus or Disclosure Document, and the Product Highlights Sheet 3.5 Portfolio Constraints: Permitted Investments, Liquidity, Borrowing and Exposure Limits 3.6 Regulations for Other CIS: Real Estate Investment Trusts and Exchange-Traded Funds 3.7 Regulation and Duties of the Scheme Trustee 3.8 Regulation of Marketing and Distribution: Distributor Categories, Collection Points and Agency Structure 3.9 Registration of Consultants: Eligibility, Fit and Proper, Duration, Variation and Revocation

5 Chapter 4 (Part 1): Marketing and Distribution — Disclosure and Transactions

4.1 Servicing Investors and the Contents of the Prospectus and Disclosure Document 4.2 The Product Highlights Sheet, Advertising Standards and Account Maintenance 4.3 The Purchase Process and Suitability Assessment Before Personal Advice 4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching 4.5 Financing the Purchase of UTS: Process, Safeguards and the Risk Disclosure Statement 4.6 EPF Transfers and Withdrawals for Investment in Approved Unit Trust Funds

6 Chapter 4 (Part 2): Marketing and Distribution — Distributions, Reporting and Service

4.7 Distributable Income, Distributions and NAV, "Buying" a Distribution and Taxation 4.8 Reporting to Investors: Confirmations, Statements, and Semi-Annual and Annual Reports 4.9 Marketing Principles, Delivering Quality Service and Handling Complaints 4.10 The Effect of Inflation, Taxation and Investment Costs on Returns 4.11 Investment Alternatives to UTS and PRS

7 Chapter 5: Code of Ethics

5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics 5.2 Core Principle 1: Honesty and Integrity 5.3 Core Principle 2: Professionalism 5.4 Core Principles 3 to 5 and Non-Compliance: Conflicts, Disclosure, Confidentiality and Misconduct

8 Chapter 6: Personal Financial Planning

6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps 6.2 Financial Planner Credentials, Skills, Remuneration, and How a Planner Differs from a Consultant 6.3 The Consultant's Role in Investment Planning and Advising Clients Through the Life Cycle

9 Chapter 7A: Features and Operations of UTS

7A.1 Structure of a UTS, the Trust Deed, the Parties and Modifying the Deed 7A.2 UTS Fees, Charges and Expenses, and the Management Expense Ratio 7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices 7A.4 Forward and Historical Pricing, and the UTMC's Holding of Units 7A.5 Unit Splits, Distributions and Their Effect on NAV 7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors 7A.7 Operational Aspects of Shariah-Compliant UTS and PRS and the Shariah Contracts Between the Parties 7A.8 Borrowing to Invest in UTS and the Risks of Loan Financing

10 Chapter 7B (Part 1): The Pension Landscape and the PRS Framework

7B.1 The Malaysian Pension Landscape and the Adequacy of Retirement Savings 7B.2 The World Bank's Five-Pillar Pension Framework in the Malaysian Context 7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities 7B.4 Why Malaysia Needs PRS: Ageing, Longevity Risk and the Benefits of PRS 7B.5 The PRS Framework and the Private Pension Administrator (PPA) 7B.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions

11 Chapter 7B (Part 2): PRS Operations

7B.7 The PRS Default Option and Tax Incentives for Members and Employers 7B.8 The PRS Account Structure (Sub-Accounts A and B) and Vesting 7B.9 PRS Withdrawals: Pre-Retirement, Retirement, Permanent Departure, Incapacity and Death 7B.10 Switching Between Funds and Transferring Between PRS Providers (Portability) 7B.11 Unclaimed Monies, Death of a Member and PRS Nomination 7B.12 PRS Funds: Number, Core and Non-Core Funds, Objectives, Risk Profiles, Asset Classes, Authorisation and Naming 7B.13 PRS Fees, Charges and Expenses 7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication

7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities

Key Takeaways Explain This Topic AI

As of 2025, employees contribute 11% of salary to EPF and employers contribute 13% for monthly wages of RM5,000 and below or 12% above RM5,000.

EPF must legally declare a dividend of at least 2.5% a year on conventional savings, but the minimum does not apply to Simpanan Shariah, whose return depends on actual Shariah investment performance.

EPF members cannot choose the asset class or fund manager for their contributions, and EPF and PRS contributions are not interchangeable.

KWAP was established on 1 March 2007 to replace the Pensions Trust Fund, and the government contributes a minimum of 17.5% of each civil servant's salary to it.

Under LTAT's scheme, armed forces members contribute 10% of monthly salary and the government contributes 15%.

Last updated: October 2026

The Employees Provident Fund (EPF)

The EPF helps employees save for retirement from a share of their monthly salary, with employers adding their own contribution.

Feature Detail (study guide, 2025)

Contribution rates Employee 11% ; employer 13% for monthly wages of RM5,000 and below , 12% above RM5,000, so an employee saves at least 23% of salary each month

Voluntary top-ups Members can choose a higher rate than 11%; extra contributions may not attract tax relief if they exceed the relief limit

Minimum dividend By law at least 2.5% a year on conventional savings; not applicable to Simpanan Shariah , whose dividend reflects actual Shariah-compliant investment performance

Dividend timing Dividends are declared after the year end ; there is no daily NAV, because contributions are commingled

Investments Mainly Malaysian Government Securities and other fixed income (including loans), plus equities and overseas assets

Member choice Members cannot choose the asset class, manager or fund mix, except partly through EPF-MIS (section 4.6)

Coverage Tied to employment : the self-employed are not covered unless they contribute voluntarily

EPF accounts: EPF restructured its accounts in 2024, so retirement savings now sit in Akaun Persaraan (formerly Account 1), alongside other accounts for specific withdrawals, and members aged 55 and above have Akaun 55 and Akaun Emas . The study guide's EPF withdrawal table uses the older account names; check EPF's current rules before advising on withdrawals.

i-Saraan (formerly the 1Malaysia Retirement Savings Scheme) lets self-employed people save for retirement through EPF. Like other EPF members, they cannot choose how their contributions are invested.

EPF and PRS together

EPF and PRS contributions are not interchangeable : money stays in the scheme it was paid into and each is managed separately.

EPF members are encouraged to use PRS if their EPF savings are insufficient .

Employers can use PRS as an extra benefit to attract talent ; PRS complements mandatory provision.

  • Feature EPF PRS
  • Mandatory? Yes, for private sector employees No, voluntary
  • Choice of manager and funds No Yes, competing providers and funds
  • Pricing Annual dividend Daily NAV
  • Minimum return 2.5% on conventional savings None
  • Self-employed Only through voluntary contributions such as i-Saraan Yes
  • Kumpulan Wang Persaraan (Diperbadankan) (KWAP)

The civil service pension scheme , established under the Pensions Ordinance of 1951, pays eligible retired civil servants a monthly pension based on a percentage of their last salary.

The government set up the Pensions Trust Fund in 1991 with a launching grant of RM500 million to help fund this liability.

KWAP was established on 1 March 2007 to replace the Pensions Trust Fund. The government contributes a minimum of 17.5% of each civil servant's salary each month; civil servants contribute nothing, as it is a defined benefit plan.

KWAP's objective is to achieve optimum returns to help the government finance its pension liability.

Lembaga Tabung Angkatan Tentera (LTAT)

Established in August 1972 by an Act of Parliament.

Provides retirement and other benefits to armed forces members (compulsory contributors) and lets officers and mobilised volunteer-force members save.

Secondary aims: socio-economic development and welfare for retiring and retired personnel.

Under its Superannuation Scheme, members contribute 10% of monthly salary and the government, as employer, contributes 15% .

Employer-Sponsored Retirement Schemes

  • Feature Detail
  • Purpose Employee loyalty and corporate responsibility: extra pension funded by the employer above EPF
  • Approval Must be approved under section 150 of the Income Tax Act 1967
  • Tax Employer contributions are usually tax-exempt up to a limit, currently a maximum of 19%
  • Vesting Contributions vest immediately but can only be enjoyed at retirement, like EPF
  • Governance Established by trust deed and fund rules; usually managed in-house by a board of trustees

Key conditions Contributions alienated to the trustees; benefits paid only at retirement at 55 , early retirement through illness, death or permanent departure from Malaysia; investment policy set by the Inland Revenue Board

Trend Losses in past crises and high administration costs have led many employers to move schemes into EPF

These schemes are open only to employees of the company or group.

Annuities

Annuities, sold by insurers with tax incentives, pay the annuitant a series of fixed payments (usually monthly) until death. Each payment is part of the purchase price plus interest. The price can be paid as a lump sum or, for retirement saving, over the working years; stopping contributions disrupts the plan. If an annuity is cancelled , the annuitant may get back contributions less administrative and other charges and must start again.