Study guide
7B.13 PRS Fees, Charges and Expenses
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.13 PRS Fees, Charges and Expenses
Key Takeaways Explain This Topic AI
In the study guide's 10-year example with 10% gross returns, RM100 grows to RM259.40 with no fees, RM236.70 with 1% annual fees, RM215.90 with 2% annual fees and RM241.20 with a 7% initial sales charge.
A PRS dealing charge must be permitted by the deed and expressed as a fixed amount or a fixed percentage, and discounts and rebates in any form are prohibited.
A change to the dealing charge within the deed's range takes effect only 30 days after the supplementary disclosure document is issued, following notice to the Trustee and the SC.
PRS Providers and Scheme Trustees may be remunerated only through annual management and trustee fees accrued daily and based on the fund's NAV.
Fees collected by a PRS Provider on behalf of the PPA are not the provider's remuneration and must not be confused with the annual management fee.
Last updated: October 2026
Why Fees Matter So Much in PRS
Higher fees mean less money invested and lower annual returns , compounding over the long life of a retirement plan. The study guide assumes four funds each earn 10% a year gross for 10 years :
- Fund A Fund B Fund C Fund D
- Initial sales charge 0% 0% 0% 7%
- Annual management fee and expenses 0% 1% 2% 0%
- Available to invest at year 0 100% 100% 100% 93%
- Net return each year 10% 9% 8% 10%
- Value after 10 years (per RM100 invested) RM259.40 RM236.70 RM215.90 RM241.20
(The study guide labels the last row "total returns after 10 years" as 259.4%, 236.7% and so on; these are values as a percentage of the amount invested.)
A beats B and C only because B's and C's fees shrink the amount compounding each year.
A beats D because D's 7% sales charge leaves only 93% invested from the start.
Members should understand all costs: management, trustee and PPA fees as well as charges on dealing.
Dealing Charges (Entry and Exit)
Rule Detail
What A charge for participating in the PRS: an entry fee , an exit fee , or just an entry fee; mainly to pay PRS Consultants and marketing costs
Basis Must be permitted by the deed , clearly disclosed and expressed as a fixed amount or a fixed percentage of the unit price or amount invested
Change within the deed's range Notify the Trustee and the SC , issue a supplementary disclosure document , then wait 30 days before the new charge applies
- Increase above the deed's maximum Only by special resolution at a members' meeting
- Discounts and rebates Prohibited in any form; members and contributors must be told the actual rate
- Remuneration of the PRS Provider and Trustee
Both may be paid only through an annual management fee and an annual trustee fee charged to the fund.
Fees are accrued daily and calculated on the fund's NAV , must be permitted by the deed , disclosed and reasonable for each party's role.
The management fee rate can be raised only through a supplementary deed with members passing a special resolution .
PPA Fees
PRS Providers may collect fees on behalf of the PPA , acting as its agents. These are not the provider's remuneration and should not be confused with the management fee. The PPA itself charges for opening, transactions and maintaining accounts, and may not impose or vary fees without SC approval.
Expenses Chargeable to the Fund
Apart from PPA fees, only expenses directly related and necessary to running the scheme and fund may be paid from it:
- commissions or fees paid to brokers or dealers ;
- custodial charges or sub-custodian fees;
- taxes and government or local authority charges;
- audit fees and the auditor's expenses;
- valuation fees for independent valuers acting for the fund;
- costs of modifying the deed , unless they benefit the provider or Trustee; and
costs of members' meetings , unless they benefit the provider or Trustee.
The Scheme Trustee must ensure every expense is legitimate and reasonable compared with commercial rates; the Trustee may reimburse its own proper expenses.
The SC's Power to Review Fees
The SC may review fees and charges. If they are inconsistent with the scheme's objectives or prejudicial to members, it may require them to correspond with the services provided .
Applying It
Encik Hakim compares two PRS equity funds with similar strategies. Fund P has a 3% sales charge and a 1.5% annual management fee; Fund Q has no sales charge but a 1.8% annual fee and a separate PPA account fee collected by the provider. Following this section, the Consultant should explain that:
the sales charge reduces the amount invested at the start, while the annual fee reduces the return every year;
over a long retirement horizon the ongoing fee difference may outweigh the one-off charge, as the study guide's Fund A to D comparison shows;
PPA fees go to the PPA and are not the provider's remuneration; and
neither fund's past performance guarantees future returns, so costs are only one factor in the choice.
UTS vs PRS Fee Rules at a Glance
- Rule UTS PRS
- Manager remuneration Annual management fee only Annual management fee only
- Fee basis Accrued daily on gross NAV Accrued daily on NAV
Raising the management fee Within the deed maximum: Trustee agreement, notice, supplementary prospectus and at least 90 days; above the maximum: unit holders' approval Supplementary deed and special resolution of members
Sales or dealing charge changes Disclosed per channel; actual rate stated Within the deed range: notice to Trustee and SC, supplementary disclosure document, 30 days