7B.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions

FIMM Combined Examination FCE

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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.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions

Key Takeaways Explain This Topic AI

Every PRS must offer three core funds: a conservative fund, a moderate fund and a growth fund, which form the default option for members who do not choose funds.

Under the trust structure, the Scheme Trustee holds each fund's assets separately from the PRS Provider's assets, so they are protected from the provider's creditors.

A supplementary deed that materially prejudices members needs a special resolution passed by a two-thirds majority, or at least three-quarters of the value of units voted for terminating or winding up a scheme or fund.

A non-prejudicial deed change needs a statement from the Scheme Trustee and PRS Provider and at least seven days' written notice to members.

PRS is open to Malaysians and foreigners aged 18 and above, with no required fixed amounts or intervals for contributions.

Last updated: October 2026

PRS Compared with Other Retirement Products

Feature PRS Unit trusts Insurance and annuities

Core funds Every PRS must offer three core funds : conservative, moderate and growth Any type of fund, based on demand Insurers offer any type of fund; no fund choice within an annuity

Default option Core funds are the default for members who do not choose; allocated by age None: the investor must choose None

Withdrawals Sub-account A locked until retirement age except for death, permanent departure, or permanent total disablement, serious disease or mental disability; sub-account B withdrawals limited (once a year) and usually taxed Buy and sell freely, subject to each fund's terms Low cash value early on; cancelling may not be worthwhile

Portability Accrued benefits can be transferred to another provider through the PPA Moving providers may mean paying charges again Surrendering may return far less than was paid

Portability is the main advantage the study guide highlights.

The PRS Structure and the Concept of Trust

A PRS under the CMSA is a retirement scheme governed by a trust : property held by one party (the Scheme Trustee ) for the benefit of another (the member ).

The Scheme Trustee holds the assets (cash, stocks, bonds) on the member's behalf , separately from the PRS Provider's assets and segregated by fund , each clearly identified.

The assets' form changes during the year (cash to equities and back) under the provider's strategy, but they remain under the Trustee's control .

If the PRS Provider has financial difficulties or insolvency , members' assets are ring-fenced from its creditors.

The Trustee has a fiduciary duty to act impartially in members' best interests. The provider (through its fund manager) makes day-to-day investment decisions, but the assets reside with the Trustee.

The Trust Deed

The PRS Regulations require a deed, registered with the SC , creating the trust between the PRS Provider and the Scheme Trustee and meeting the PRS Guidelines' minimum requirements.

The deed covers the duties of the parties and full particulars of the scheme and its funds. Covenants of the provider and Trustee, their joint covenants and other covenants are set out in Schedule D of the PRS Guidelines .

Modifying the deed

A deed may be changed by a supplementary deed that is registered with the SC and accompanied by either:

Situation Requirement

The change materially prejudices members (for example changes to investment objectives, risk profile, or fees and charges) A special resolution of members: a two-thirds majority , or at least three-quarters of the value of units held by members voting when the purpose is to terminate or wind up a scheme or fund

The change does not materially prejudice members A statement from the Scheme Trustee and PRS Provider that it is not materially prejudicial, plus at least 7 days' written notice to members

Who Can Contribute

Malaysians and foreigners may join.

Members must be individuals aged 18 and above .

Employers may contribute for employees as a benefit or to encourage loyalty, possibly under a vesting schedule (section 7B.8).

How Contributions Work

Rule Detail

Amounts and frequency No required fixed amounts or intervals ; providers may set minimum and maximum contributions for their funds

Opening the account The PPA opens a lifetime PRS account once the member completes the form and other requirements; no contribution is needed to open it

Where money goes The PPA does not accept contributions ; members contribute through the PRS Provider , at account opening or later

Timing If the account and first contribution are submitted together, the provider need not wait for the account to open before subscribing units

Flexibility Contributions can stop and restart ; a member may contribute to more than one scheme

FIMM's practice question: correct statements are that employers can contribute for employees , providers set the minimum contribution and members can stop contributing at any time ; it is false that members can contribute to only one PRS.

Applying It

Mr Kumar, a 29-year-old Indian national working in Kuala Lumpur, asks whether he can join a PRS. He can: PRS is open to foreigners aged 18 and above. He can contribute whenever he likes, above his chosen provider's minimum, and later contribute to a second provider's scheme too. If he leaves Malaysia permanently, the withdrawal rules for permanent departure apply (section 7B.9).