7B.5 The PRS Framework and the Private Pension Administrator (PPA)

The PRS Framework

The PRS framework came from the SC's recommendations to the Government to accelerate the private pension industry. A robust industry needs a strong regulatory structure, so the SC has the duties, powers and resources to regulate, supervise and enforce. The aim: a well-functioning industry that promotes stability and protects members and beneficiaries.

• PRS is a capital market product and a voluntary long-term investment scheme to help individuals save for retirement.
• The SC approves PRS Providers, Scheme Trustees and the schemes, and licenses PRS distributors where applicable, to ensure good conduct and reasonable advice.

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The Private Pension Administrator (PPA)

The PPA is central to an efficient PRS industry. It sets up and runs the administrative system for all PRS, facilitates and maintains all PRS transactions by contributors and members, and is a resource centre for PRS data and research.

Duties

The PPA is approved by the SC to perform record keeping, administration and customer service for members and contributors. Specific duties include:

1. receiving and transmitting instructions in the manner the SC specifies;
2. keeping records of all transactions and money paid or received;
3. providing information to PRS Providers and members; and
4. other duties the SC specifies.

It must also:

• act in the public interest, particularly to protect members;
• notify the SC immediately of adverse circumstances likely to affect members;
• not impose or vary fees on providers or members without the SC's prior approval, and get SC approval for its terms of reference and operating rules;
• promote awareness of PRS, act as a data and research centre, and monitor fees and performance across PRS Providers; and
• not delegate or outsource any duty without SC approval.

FIMM's practice question asks which is not a PPA duty: appointing the Scheme Trustee for each scheme is not.

Governance

Functions in practice

1. Receive registration data from PRS Providers and issue a lifetime PRS account number.
2. Keep databases of all private pension account numbers and transactions.
3. Transmit members' instructions to update details, transfer between providers and withdraw.
4. Issue consolidated statements to all members.
5. Run a website with online account access, details of each provider's schemes and education material.
6. Operate a call centre and handle complaints.
7. Produce statistical and compliance reports on the industry.

The PRS Account

Fees

• PRS Providers charge for investment management, trustee and administrative costs, set out in each disclosure document.
• The PPA charges fees for opening, facilitating transactions and maintaining accounts. Its website lists the main fees of each provider for comparison.
• PPA fees may be collected by PRS Providers acting as the PPA's agents; these are not the provider's remuneration.

Keeping Track

Members can check holdings online with the PPA or ask their providers, and receive periodic provider statements and PPA consolidated statements. For consolidated holdings and total sub-account B balances, ask the PPA; for provider-specific details (such as pre-retirement withdrawal amounts), ask the provider.

Applying It: One Member, Two Providers

Puan Aisyah, 38, has PRS units with Provider X, funded by her employer, and tops up a Shariah-compliant fund with Provider Y herself. Her questions show how work is split between the PPA and the providers:

The same split explains a common distractor: the PPA keeps records, transmits instructions and gives consolidated information, but it never accepts contributions and never manages a fund.