Finance

PPA saving scheme for retirement investing

Is PPA saving scheme good option for retirement investing?

The Private Pension Administrator (PPA) isa central administrator established to promote and administer the Private Retirement Scheme (PRS) growth.

The scheme offers a good and balanced way of saving the retirement corpus needed after retirement, members of the PPA scheme can save more even before they collect their monthly income because the employers are included in the saving scheme contributing about 19% of the salary earned by the employee. Over two thirds or 66%- 75% of the salary earned monthly are needed monthly after retirement on a monthly basis, hence the need to save about one third or 33% of the current income by the individual. Of the 33% needed to be saved monthly, about 23% will channelled directly to the Employees Provident Fund (EPF) while the remaining 10% will be saved by individual.

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The PRS which is a voluntary investment and savings allows for account holders to enjoy tax relief each year as long as they are part of the scheme. This will also help personal saving of the individual considering that the tax burden has been removed.

Savings by individuals under the PPA saving scheme in the PRS accounts will also be invested in funds offered by providers of PRS ranging from conservative, moderate, or growth depending on the type chosen by the account holders. This scheme not only helps the individual to save but also to invest their savings and generate more income while saving.About eight PRS providers have been registered with PPA saving scheme helping the account holders to choose from an array of organisations.

The Private Pension administrator (PPA) also allows for corporate PRS accounts apart from the individual PRS accounts where money is deposited manually by the individual account holders. The corporate PRS enables the employers of individuals to contribute about 7% of the monthly income of the employee on his/her behalf, this facilitates the individual PRS contributions through direct salary deductions. Apart from increasing the savings of the individuals that are part of this corporate PRS accounts, it also increases the chances of saving before spending since the money will be deducted directly from their salary by the employer. While the employers are contributing about 12% – 13% directly into the employee’s EPF accounts, an additional 6% – 7% is facilitated through the corporate PRS accounts making upto 19% contribution directly from the employee thus helping the individuals to save about 19% of their income before being paid by their employers.

The employers with corporate accounts contributing to the approved scheme can also enjoy about 19% tax incentives among other benefits making it beneficial for both the employers and employees.Other benefits enjoyed by corporate PRS account holders include enhancement of corporate reputation as a caring organisation.

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Apart from the benefits enjoyed by both individual account holders and corporate PRS account holders, it is imperative to save and invest with organisations that shares your view such as Private Pension administrator (PPA).

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Harish Yadav

Finance and market analyst and chief writer on howtofinance. Passionate to read books and articles on marketing and accounting. Also edits other articles and publish them here.

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