Islamic PRS

Shariah-Compliant Retirement Savings for Malaysian Muslims

Islamic Private Retirement Scheme (PRS) funds offer a way for Muslims in Malaysia to save for retirement while adhering to Shariah principles. This guide will help you understand Islamic PRS, its unique features, and how it compares to conventional PRS options.

Understanding Islamic PRS

Islamic PRS funds are designed to comply with Shariah law, providing a halal investment option for Muslims and those who prefer ethical investing.

Key Principles of Islamic Finance in PRS

Prohibition of Riba (Interest): Islamic PRS funds do not invest in interest-bearing instruments.
Avoiding Gharar (Uncertainty): Investments avoid speculative activities with excessive risk.
Ethical Investments: Funds exclude businesses involved in prohibited activities (e.g., alcohol, gambling).
Profit and Loss Sharing: Returns are based on the performance of underlying assets, not fixed interest.

How Islamic PRS Differs from Conventional PRS

Feature	Islamic PRS	Conventional PRS
Investment Approach	Shariah-compliant	No religious restrictions
Asset Classes	Limited to halal investments	Broader investment universe
Return Mechanism	Profit-sharing, no interest	May include interest-bearing instruments
Oversight	Shariah Advisory Committee	Standard regulatory oversight
Risk Profile	Potentially lower due to ethical screening	May have higher risk tolerance

Choose Wisely: Understanding these differences can help you select the PRS option that aligns with your beliefs and financial goals.

Islamic Fund Options

Islamic PRS providers offer a range of fund options to suit different risk profiles and investment objectives.

Types of Islamic PRS Funds

Islamic Growth Funds
- Higher allocation to Shariah-compliant equities
- Suitable for long-term investors with higher risk tolerance
Islamic Balanced Funds
- Mix of Shariah-compliant equities and sukuk
- Moderate risk profile, balancing growth and stability
Islamic Conservative Funds
- Primarily invested in Islamic fixed income securities (sukuk)
- Lower risk, focused on capital preservation
Islamic Money Market Funds
- Short-term, highly liquid Islamic investments
- Lowest risk, suitable for conservative investors or short-term savings

[Set of Pie Charts: Asset Allocation of Islamic PRS Funds]

Chart 1: Islamic Growth Fund
- 70-80% Shariah-compliant Equities
- 20-30% Sukuk and Islamic Money Market Instruments
Chart 2: Islamic Balanced Fund
- 40-60% Shariah-compliant Equities
- 40-60% Sukuk and Islamic Money Market Instruments
Chart 3: Islamic Conservative Fund
- 80-90% Sukuk
- 10-20% Islamic Money Market Instruments
Chart 4: Islamic Money Market Fund
- 100% Islamic Money Market Instruments

Explore Options: Compare Islamic PRS Funds from different providers to find the right fit for your risk profile and retirement goals.

Performance of Islamic Funds

Historical performance can provide insights into the potential of Islamic PRS funds, though past performance doesn't guarantee future results.

[Interactive Line Chart: Islamic vs Conventional PRS Performance]

X-axis: Years (last 10 years)
Y-axis: Cumulative Returns (%)
Lines for:
- Average Islamic Growth Fund
- Average Conventional Growth Fund
- Shariah-compliant Benchmark (e.g., FTSE Bursa Malaysia EMAS Shariah Index)
Features:
- Ability to toggle between Growth, Balanced, and Conservative fund comparisons
- Tooltips showing annual returns and key economic events

Key Observations:

Performance comparison during different market cycles
Impact of ethical screening on returns
Volatility comparison between Islamic and conventional funds

Analyze Trends: Use our interactive chart to compare the historical performance of Islamic and conventional PRS funds.

Shariah Compliance

Islamic PRS funds adhere to strict Shariah principles, ensured through rigorous screening and oversight processes.

Shariah Screening Process

Business Activity Screening: Excludes companies involved in non-halal activities
Financial Ratio Screening: Ensures companies meet specific financial criteria (e.g., debt ratios)
Ongoing Monitoring: Regular review to maintain compliance

Shariah Advisory Council

Composition: Panel of Islamic scholars and finance experts
Role: Oversees fund operations to ensure Shariah compliance
Responsibilities:
- Approving investment strategies
- Reviewing fund holdings
- Issuing fatwas on financial matters

Ensure Compliance: All Islamic PRS funds are certified by Shariah Advisory Councils, providing assurance of their halal status.

Comparison with Conventional PRS

Understanding the key differences can help you make an informed decision between Islamic and conventional PRS.

Key Differences

Investment Universe: Islamic PRS has a more limited investment scope due to Shariah restrictions.
Risk Profile: Islamic funds may have lower overall risk due to ethical screening.
Return Mechanism: Based on profit-sharing rather than interest.
Ethical Considerations: Aligns with Islamic ethical and moral values.

Choosing Between Islamic and Conventional PRS

Consider these factors when making your decision:

Personal Beliefs: Alignment with Islamic principles
Risk Tolerance: Assess if the risk profile of Islamic funds suits your needs
Investment Goals: Evaluate if Islamic PRS can meet your retirement savings targets
Diversification: Consider how Islamic PRS fits into your overall investment portfolio

Make an Informed Choice: Take Our PRS Suitability Quiz to determine whether Islamic or conventional PRS is right for you.

Frequently Asked Questions

Q: Can non-Muslims invest in Islamic PRS funds? A: Yes, Islamic PRS funds are open to all investors, regardless of religious beliefs.
Q: How does the taxation of Islamic PRS compare to conventional PRS? A: The tax treatment is the same for both Islamic and conventional PRS, with contributions eligible for tax relief up to RM3,000 annually.
Q: Are returns from Islamic PRS generally lower than conventional PRS due to restrictions? A: Not necessarily. Performance varies and depends on market conditions and fund management. Some Islamic funds have outperformed conventional funds in certain periods.

Explore Islamic PRS Options

Ready to start your Shariah-compliant retirement savings journey?

Compare Islamic PRS Providers
Calculate Your Retirement Needs (Shariah-Compliant Calculator)
Speak with an Islamic Finance Advisor
Open an Islamic PRS Account