Does it worth to put saving in Skim Simpanan Pendidikan Nasional (SSPN-i)?

Now has entered the last month for our income tax planning for year 2013, and no doubt SSPN-i which can bring up to RM6,000 tax relief is one of the major consideration, especially for tax payers who fall in the highest income tax bracket.

The National Education Savings Scheme (Skim Simpanan Pendidikan Nasional, SSPN-i) is setup by the National Higher Education Fund Corporation (Perbadanan Tabung Pendidikan Tinggi Nasional, PTPTN) for the purpose of higher education.

PTPTN is an education financing scheme established for the purpose of providing education financing (government study loan) to Malaysian students pursuing studies in local public or private institutions of higher education.

Over the years, PTPTN has been facing difficulty in getting back the loan repayment from graduated students, and there are RM2.3 billions of unsettled loan as reported in September 2013.

As such, there is little doubt to view SSPN-i to be setup to maintain the cash flow of PTPTN, or new students might not be able to obtain loan from PTPTN as their cash flow dried up.

Back to our question. Does it worth to put saving in Skim Simpanan Pendidikan Nasional (SSPN-i)?

From the income tax saving perspective, if you are in the highest income tax bracket of 26%, and you deposit RM6,000 into the SSPN-i account for your children, you will enjoy a tax relief of up to RM6,000 x 26% = RM1,560.

On top of that, SSPN-i will give tax exempted dividend of about 4% every year. If you only deposit the money in December, you won't get much dividend for this year, and you will need to wait for another year to get your first full-year dividend.

As long as the SSPN-i account has savings of RM1,000 and above, there will be free Group Takaful insurance as below:

1. Coverage of RM to RM (dollar to dollar) of up to RM50,000 (general insurance)
2. Death benefit / compensation for the depositor (RM2,000) and the beneficiary (RM500)

The depositor must be 18-65 years, and the beneficiary must be 1 day to 28 years.

There is also a matching grant of up to RM10,000 if your family income is below RM2,000 by the time your child is accepted into and registered with a higher education institute recognised by the government.

If you want to enjoy the tax relief again next year, you need to top up your SSPN-i account with additional savings.

Note that once the money is put inside SSPN-i, it is very difficult to withdraw it. You can only withdraw once per year, up to RM500 or 10% of the savings (whichever is lower). You can only close the account with 100% withdrawal when:

• Your child is offered a place in any higher learning institution
• Your child has voluntarily withdrawn from the education system
• Your child has been expelled for a specific reason
• Suffering from an illness certified by a doctor as being incurable
• Experience total permanent disability as certified by a doctor;
• Death of the child
• Death of the depositor

Assuming that you keep your RM6,000 in SSPN-i account for 20 years, your total return, including the income tax savings of 26% relief, is about RM8,200.

In order to see whether it worth or not to put the savings in SSPN-i, I have expanded the table above to show the accumulated gain every year, and the annualized return in percentage.

 

As you can see from the table above, it is a good choice to put saving in SSPN-i if your child is above 15 years old and going for tertiary education in 5 years time. You will get the annualized return of approximately 8.6% and above based on 4% dividend rate.

After that, your annualized return will drop due to the low dividend rate, but still comparable to the return rate of Employees' Provident Fund (EPF) which estimated to be around 6% annually.

However, take note that the SSPN-i dividend between 2009-2011 are below 4%:

• 2009: 2.5%
• 2010: 3.25%
• 2011: 3.75%
• 2012: 4.25%

So it is not guaranteed you will get 4% dividend every year.

What if the dividend rate is estimated at around 3% per year? The table will be as below:

It is still a good choice to put your money in SSPN-i with an estimated dividend rate of 3% per year, for a period of below 5 years. More than that, there are a lot of investment instruments for your consideration which can give better return.

What if the estimated dividend rate dropped to 2%? The table will be as below:

Well, I think you won't consider it at that kind of dividend rate if your child is less than 10 years old now.

You might probably be interested to also read about:

• How to top up SSPN-i saving using Maybank2u
• Online SSPN-i Statement of Account (for income tax relief)

Astro offers free On-The-Go (OTG) service to all subscribers until 15 Feb 2014

Parallel to the recent Astro price hike to sport pack and family pack in September 2013 which affects most of their subscribers, Astro has made an offer to all its subscribers to have FREE access to Astro On-The-Go (OTG) until 15 February 2014 to watch/listen some of their TV and radio channels over the Internet using either web browser from computer, or Android smart mobile devices (phone/tablet), or Apple smart mobile devices (iPhone/iPad).

Note that not all the channels in your Astro subscription are available in OTG, only some of them are made available. One of the good OTG features is Catch-up TV, which enables you to watch your favourite TV programme and/or drama that you have missed out when they are on show in Astro live TV.

In order to access Astro OTG, you need to register for an Astro ID that link to your Astro subscription account.

To access to Astro OTG using web browser, go to https://onthego.astro.com.my/ and login your Astro ID.

To access Astro OTG with your Android smartphone or tablet, install the Astro On-The-Go app from Google Play Store here: https://play.google.com/store/apps/details?id=com.astro.astro

To access Astro OTG with your iPhone or iPad, install the Astro On-The-Go app from iTune App Store here: https://itunes.apple.com/my/app/astro-on-the-go/id521993797

After 15 February 2014, this Astro OTG will still be free to Superpack, Multiroom and Sports Pack subscribers.

Suitable home loan offers in Malaysia

Looking for the most suitable home loan?

Almost every bank in Malaysia offers housing loans at varying rates and terms. There is no definite answer, as to which one is the best because it all largely depends on the customer’s needs and capacities.

If you plan on applying for a home loan, the first thing you need to do is make a serious assessment of your current financial situation and a concrete plan that includes the property you wish to acquire, as well as the interest rate and loan duration that works best for you.

Other things to remember:

• Most banks lend up to 90% of the property asking price or valuation
• Some home loans only apply to uncompleted properties
• The best loan will also largely depend on whether you are first-time home buyer or someone looking to re-mortgage
• Many Malaysian banks offer flexi-loans
• Loan approvals may be given depending on your minimum income and credit score

Once you are ready to shop for the most suitable housing loan, remember that the lowest interest rate or the fastest application processing period does not always mean the best. You may have to make a choice between taking a loan with a fixed interest rate or a variable interest rate. Some home loans incur fixed interest for the first few years (lock-in period) before shifting to variable or floating rates. To get started in your search for the best loan to finance your dream home, check out the following housing loan offers:


AIA Tiered Home Loan

The Tiered Home Loan package by AIA is an example of a home loan with a fixed interest of 4.25% within a lock-in period. For the first two years, the rate on your mortgage would not fluctuate based on the base lending rates. Foreigners who are participants of the MM2H (Malaysia My Second Home Program) are eligible for this loan.


Citibank FlexiHome Loan

Flexible home loans such as those offered by Citibank allow borrowers to pay an extra sum on top of the designated monthly mortgage, whenever possible, as a way to reduce minimum and costs from interest. Eligible applicants can borrow up to RM100,00 with Citibank’s FlexiHome Loan, which can be payable over a period of 35 years. You would have to have an annual income of at least RM24,000 to be qualified.


Maybank Home Financing

If you would like a housing loan that allows you to pay a fixed amount every time you make a repayment, apply for Maybank’s Home Financing programme. Maybank Home Financing is shariah-compliant, which means that it adheres to the principles of Islamic banking. Islamic loans are offered by several other Malaysian banks.


AmBank Home Link

Loans such as Ambank’s Home Link come with flexible terms that allow borrowers to connect their loan account with a current bank account, as a way to shorten the loan period and save on loan interest rates. You can borrow up to RM800,000 at an interest rate of as low as 4.20%. Like most home loans in Malaysia, both citizens and non-citizens can apply for the Home Link program.

If you would like to see more housing loan offers available, you can try using a comparison tool and be able to view more loan offers from different Malaysian banks.

Note: This is a guest post by CompareHero.my, a Malaysia’s financial comparison portal which helps consumer in finding the right financial products at the right price.