Retirement Plan

It is not the intention of this posting to promote this retirement plan, but this article is related to what is being taught in most actuarial science programs. The idea is to have a program that guarantees an income for life after retirement, that is funded by contributions during the working years. Students in actuarial science would be able to work out the monthly contribubtions to be made during the working years that would provide a guaranteed monthly income during the retirement years. Provisions should be made for inflation because this planning involves a very long period of up to 50 years and inflation can eat up all the savings and potential income from the plan. To give a rough idea, at an inflation rate of 7%, an amountof money now will double in ten years time. So, RM1,000 in ten years time will buy approximately the same thing as RM500 would buy now.

Individuals have to plan for their retirement years and a guaranteed income for life will go a long way to providing financial security during those years. Insurance and takaful companies should design the most appropriate plans to be marketed to consumers. At the same time, individuals who are working now must be made aware of the importance of making contributions now so that they will have enough income during their retirement years.

These savings for retirement will create a huge pool of capital for investment.

Surah Yusuf verses 43 to 55 in the Quran tells the story of Prophet Yusuf who interpreted the dream of an Egyption king to mean that the country must work diligently for 7 years and save some of the harvests to be used during the next 7 dreadful years. This can be likened to the retirement planning required by each individual.

Below is the article:
Malaysia: Prudential Launches New retirement Plan
Business 2008-11-13 16:37
KUALA LUMPUR, MALAYSIA: Prudential Assurance Malaysia Bhd has launched its latest regular premium investment-linked plan designed for retirement.

The plan, the PRUretirement accumulator, offers a guaranteed monthly income to customers on retirement besides capital protection.

Its chief executive officer, Bill Lisle said the new plan is ideal given the current economic backdrop and high inflationary prices.

"Our recent independent survey, the Prudential Retire-Meter 2008, found that 48% of Malaysians fear they might not have enough money to take care of retirement needs in view of the current high inflation," he told reporters when unveiling the new plan Thursday (13 Nov).

The PRUretirement accumulator functions in two distinct stages - the accumulation and payout stages, where terms for both are determined by the customers at policy inception.

In the accumulation stage, the monthly premium paid by the customer will be invested for a fixed period ranging from five to 40 years.

Premiums for the plan start from RM100 per month.

At the end of the accumulation stage, the customer will begin to receive a stream of guaranteed monthly income over a specific number of years known as the payout stage.

The plan also gives customers greater control over their funds by providing the flexibility to make withdrawals during both the accumulation and payout periods as well as the option to top up premiums to match growing retirement goals.

Beyond its savings benefit, the Pruretirement accumulator also ensures that the customer is covered for misfortunes such as death or total and permanent disability.

The PRUretirement accumulator is the second retirement specific product developed by Prudential after the launch of the highly successful PRUlink income, a single premium investment-linked plan at the end of last year. (Bernama)

MySinchew 2008.11.13