7B.10 Switching Between Funds and Transferring Between PRS Providers (Portability)
Key Takeaways
Members may switch between core and non-core funds within a PRS, and PRS Providers are encouraged to charge low or no switching fees, though they may limit the number of switches a year.
A first transfer to another PRS Provider can only be made after one full year from the first contribution to any fund managed by the transferor provider.
Only one transfer may be made from a particular PRS Provider in a calendar year.
Transferred amounts keep the 70:30 split between sub-accounts A and B, and if sub-account B is too small, units from sub-account A make up the shortfall.
Once a properly completed transfer form is accepted, the transferor PRS Provider has five business days to verify, redeem the units and pay the transferee provider.
Switching Between Funds Within a Scheme
- Switching is allowed: funds are at the member's disposal to change asset allocation or respond to market views (for example from a bond fund to a money market fund when rates may rise, or out of an emerging-market equity fund during political turmoil).
- Members may switch between core and non-core funds.
- Providers are encouraged to charge low or no switching fees within their own funds, but may set conditions and limit the number of switches a year.
- Where an employer contributes (with or without vesting), the employee chooses the funds and decides on switches.
Transferring to Another Provider (Portability)
Portability is one of PRS's distinct advantages: before retirement age, a member can move accrued benefits to the provider that best suits them.
How it works
- The member approaches the transferee (new) provider and completes the PPA's Transfer Form (TF), stating the funds and units to transfer out and the funds to transfer into.
- A transfer may be full or partial, from one or several funds of the transferor provider.
- The member does not split units between sub-accounts A and B; the transferor completes those details, applying the 70:30 ratio (70% from sub-account A into sub-account A, 30% from B into B).
- If pre-retirement withdrawals have left too little in sub-account B, the transferor may redeem extra units from sub-account A to fund sub-account B at the new provider.
- The transferor has 5 business days after accepting a complete TF to verify, redeem and pay the transferee, then uploads the TF to the PPA's portal with fees and prices. If it rejects the TF, it states the reasons on the portal.
Conditions for a transfer
| Condition | Detail |
|---|---|
| Sub-account matching | Proceeds from sub-account A must buy units in sub-account A at the new provider; B into B |
| Waiting period | First transfer only after one full year from the first contribution to any fund of the transferor (by member or employer) |
| Frequency | No prior transfer from that transferor in the same calendar year |
| Units | Enough units in the funds selected |
| Parties | Each request involves only two providers |
| One-to-one | Each fund transferred out goes into one fund |
Fees and pricing
- Providers may charge only actual and reasonable expenses for transfers and switches, as disclosed.
- Redemption charges and transfer fees are deducted from sub-account A.
- A transfer fee covering several funds is apportioned (for example an RM25 fee over two funds is RM12.50 each).
- Both providers use the price at the next valuation point after the request; there is a time lag, so prices can move during the transfer.
Switching vs Transferring at a Glance
| Feature | Switching | Transferring (portability) |
|---|---|---|
| Between | Funds of the same PRS Provider | Funds of two different PRS Providers |
| Paperwork | The provider's switching form | The PPA's Transfer Form, lodged through the new provider |
| Limits | Provider may cap switches per year | First transfer after one full year; one transfer per transferor per calendar year |
| Charges | Encouraged to be low or nil | Actual and reasonable expenses, deducted from sub-account A |
| Sub-accounts | Units keep their A and B allocation | A goes to A, B goes to B, with shortfalls in B made up from A |
Worked Examples (Study Guide)
Ishak transfers a whole fund
Ishak holds 1,000 units of Beta Equity Fund (NAV RM0.80) with PRS Beta and transfers them to Alpha Bond Fund (NAV RM2.00) with PRS Alpha. Transfer fee: RM25.
| Item | Sub-account A | Sub-account B | Total |
|---|---|---|---|
| Value redeemed (RM800 at 70:30) | RM560 | RM240 | RM800 |
| Less transfer fee (from A) | −RM25 | — | −RM25 |
| Amount transferred | RM535 | RM240 | RM775 |
| Alpha Bond units bought at RM2.00 | 267.5 | 120 | 387.5 units |
Ishak's Alpha Bond holding rises from 1,000 to 1,387.5 units, worth RM2,775.
Leo's sub-account B shortfall
Leo transfers 450 units of Alpha Bond at RM2.00 (RM900) after earlier withdrawals left only RM100 in that fund's sub-account B.
- Required from B: 30% × RM900 = RM270; available: RM100.
- Shortfall made up from sub-account A: RM270 − RM100 = RM170.
- So RM800 comes out of A (RM630 for A plus RM170 for B) and RM100 out of B, and the new fund receives RM630 in A and RM270 in B, restoring 70:30.
Ahmad's timing
Ahmad's employer began contributing to PRS Bravo on 1 January 20X4. He may transfer from Bravo from 1 January 20X5, because one year has passed since the first contribution (employer contributions count). If he also contributed to PRS Delta from 1 October 20X3, he may transfer from Delta in 20X5 too, because it is a different provider and his first Delta transfer that year.
A member first contributed to Provider X's PRS on 1 March 20X5. When is the earliest date she can transfer her accrued benefits to Provider Y?
1 April 20X5
1 September 20X5
1 March 20X7
1 March 20X6
A member transfers RM2,000 of a fund to another provider, but only RM400 remains in that fund's sub-account B. How much must come from sub-account A to make up sub-account B's required share?
RM200
RM400
RM600
RM1,400
From which sub-account are redemption charges and transfer fees deducted when transferring between PRS Providers?
Sub-account B
Equally from both sub-accounts
They are paid separately by the member in cash
Sub-account A
Sections you finish are checked off in the contents.