When her eldest daughter was born, Elsie was already thinking about the future of the baby. The new mother worried about whether the family could afford the best possible education for her daughter – and her future siblings.
âWe had faced this challenge before in the family, because my sister wanted to continue her education, but we had financial problems. It was a difficult time for the family, and I didn’t want this to happen to my own children. “says Elsie.
Fast forward 16 years later, the independent entrepreneur is now saving for the studies of her three children, the youngest being five years old. The Covid-19 pandemic had reduced his family’s ability to save by nearly a third. But she’s grateful that they can still put money aside through the Simpan SSPN (National Education Savings Plan).
Statistically, Elsie’s family is luckier than most other Malaysians. Household savings as a percentage of gross domestic product (GDP) have fallen to a new low since the 1970s. Data from Malaysia’s Department of Statistics shows that average household income has fallen by an average of 10%. 3% in 2020 compared to a year ago. At the same time, the number of poor households increased from 405,400 in 2019 to 639,800 in 2020, or about 58% over one year.
This means that for many Malaysian families, saving for their children’s future education is increasingly becoming a luxury. So it’s important to recognize the hidden blessing of being able to save while you can as a “gift of love” to your children, says Dr Desmond Chong Kok Fei, vice president of the Malaysian Financial Planning Council (MFPC).
âA lot of parents don’t know where to start or how much money to start talking to a financial planner,â he says, offering an example: âTo get a medical degree from a local private higher education institution , it would cost easily If you have a large family with five or more children, the total required for your children’s education can easily approach RM1 million.
âSaving so much money is not easy for most Malaysians. So it’s important to start thinking and acting early, and not to take things for granted if you’re lucky enough to be able to set aside some savings. “
In this way, according to Dr. Desmond Chong, children will enter adulthood with the financial means to choose their path in life and will not be forced by financial limitations to seek options that lead to other problems.
Provide a debt-free future
In many ways, saving for a child’s education is indeed a gift of love. In many other countries, student debt has become a national crisis, with many graduates grappling with crippling financial debt as they seek to move from higher education to the workforce.
The United States is a famous example. This year, a total of 42.9 million Americans owe some US $ 1.57 trillion in federal student loans, which equates to an average of US $ 36,150 (nearly RM 153,000) for each student.
Helping Malaysian parents avoid this is the main reason for the creation of Simpan SSPN, according to the National Higher Education Fund Corporation (PTPTN). Through Simpan SSPN, the fund hopes to empower the next generation of Malaysians to build their own futures free from the shackles of student debt.
âWith early financial planning, graduates will no longer have to repay their student loans. Their money goes directly into their own financial savings, for the purchase of real estate, for retirement and even for their own children’s education later, âexplains PTPTN.
For government worker Kamaruzaman, 48, whose oldest is halfway through college this year, saving through Simpan SSPN for his children is among the best decisions of his life.
He stresses the importance of separating education savings for children from all other savings to ensure that the nest egg is not affected in an emergency.
âMy oldest is 20 years old and is currently at university; So far praise God we have not taken out any student loans and my child will graduate debt free. God willing, that will be the case for my other two children later, “he says.
âThe cost of living is constantly increasing, as is the cost of education. So if we can afford it, this is something we cannot forget to do for the sake of the children. I am saving in Simpan SSPN because it will secure my children’s education – in addition to the tax break and government guarantee, of course, âadds Kamaruzaman.
The father of three refers to government tax relief of up to RM 8,000 for the Simpan SSPN savings which remains in place until 2022. The savings are guaranteed by the government.
The SSPN-i was introduced in 2004, followed by an improved savings plan called SSPN-i Plus in 2015.
A secure future, come what may
This year, PTPTN relaunched SSPN-i Plus as Simpan SSPN Plus and SSPN-i as Simpan SSPN Prime. In addition to income tax relief and competitive dividends, depositors earning less than RM4,000 per month will receive matching grants of up to RM 10,000 per eligible family. With Simpan SSPN Prime, desopsisers will also get free takaful coverage for savings over RM1,000.
True to PTPTN’s tradition of doing everything possible to encourage Malaysians to save, the fund has also launched a new campaign called Cabutan WOW! Simpan SSPN Plus 2021, with prizes worth nearly RM320,000 for 221 winners.
The grand prize is a gold bar valued at RM 150,000. Two second prize winners will each receive a Perodua Bezza 1.3AV and three third prize winners will each receive a brand new ThermomixÂ® set. The remaining 215 winners will receive cash prizes of RM221 each.
The four-month campaign ends on December 31 of this year. More information is available at www.lovesspn.com.
Prices aside, Dr Desmond Chong says takaful coverage is an essential aspect of saving for education because it provides more security for parents and their children. In the event of premature death, the takaful operator will assume the responsibility and commitment to ensure the education of the children of the deceased.
âThere aren’t a lot of products in Malaysia where you can get tax relief on your savings, which is also a form of return. It’s a kind of compulsory savings, and the fund is guaranteed by the government, so you don’t have to. worrying about operator collapse or something, âadds Dr. Desmond.
Elsie, whose Simpan SSPN Children’s Savings are backed by takaful coverage, agrees. She used to feel anxious about missing monthly deposits because she was busy at work, but with direct debit available now, she can breathe easier. And the added benefits only add to his relief.
“We are worried because in the future you never know what problems we will face. Maybe we will not be able to work then or have health problems. With these savings and this protection, there is something for the future of my children no matter what, âsays Elsie.