UNIVERSITI UTARA MALAYSIA

COLLEGE OF BUSINESS
SCHOOL OF ECONOMICS FINANCE & BANKING

CODE:
COURSE:
PRE-REQUISITE:

1.0

BWRR 3113
RETIREMENT PLANNING
BWFF2033 FINANCIAL MANAGEMENT or
BWFF2013 FINANCIAL MANAGEMENT 1

SYNOPSIS
This course concentrate on another important aspect of financial planning which is
retirement planning. The course will examine the saving strategies related to determining
the retirement income needs, wealth building and capital preservation. The course will
familiarize students with important retirement planning concepts, including the government
retirement program, savings and investment vehicles. Overall this course will give the
students ability to apply these concepts to best serve their retirement planning needs and
also the specific needs of clients.

2.0

OBJECTIVES
Upon completion of this course, student should be able to;
2.1
2.2
2.3
2.4
2.5
2.6

4.0

understand the needs to plan for retirement and retirement process.

develop understanding and competency in determining required capital for
retirement.
understand the risks and obstacles in planning for one's retirement.
understand the impact of investment decisions on pre-retirement and postretirement.
Understand the various retirement schemes available for retirement planning
purposes.
Understand financial and non-financial issues surrounding retirement planning (i.e.
credit, debts, lifestyle, and legacy).

REFERENCES
Allen, T.E., Melone, J.J., Rosenbloom, S.J., & Mahoney, F.D. (2003). Pension
Planning: Pension, Profit-Sharing and other Deferred Compensation Plans.
McGraw-Hill.
Bertam, D., (2004), 9th ed., Retirement Planning Handbook, Horlow: Clayfield
Professional Guidance Zurich Series.

Larimce, T. et. Al. (2009), The Bogleheads Guide to Retirement Planning, Hoboken:
Wiley.
Module 6, Retirement Planning, Registered Financial Planner Program, 3rd Edition,
Malaysian Financial Planning Council, 2008.
Seong, Y.L. (2000). Retirement Planning Game Plan for Financial Liberation in
Malaysia & Singapore, DWealth Publication.
Slesnick, T & Suttle, J. (2009), IRAs, 401(k)s & Other Retirement Plans: Taking Your
Money Out, Nolo
5.0

CONTENT
No.
1.

2.

3.

Topics
1.0

2.0

3.0

Hours

INTRODUCTION
1.1
Definition of The importance of retirement planning
1.2
The retirement needs analysis
1.3
Determination of financial objectives at retirement.
1.4
Calculation of retirement fund to meet objective.
1.5
Availability on non-funded safety nets.
1.6
The underlying principle of retirement planning
1.7
The present and future demographic of Malaysia.
1.8
The effect of changing demographic on retirement planning.

THE RETIREMENT PLANNING PROCESS

2.1
Establishing retirement goals and objectives
2.2
Gathering data relating to Retirement Planning
2.3
Analyzing data to determine client's situations and his
retirement needs
2.4
Designing and recommending a retirement plan
2.5
Implementing the retirement plan
2.6
Monitoring performance and reviewing the retirement plan

DETERMINATION OF THE REQUIRED RETIREMENT CAPITAL

3.1
Determining the lump sum need or the required retirement
capital sum based on Capital Liquidation Approach
3.2
Determining the lump sum need or the required retirement
capital sum based on Capital Conservation Approach
3.3
Impact of rate of return, inflation rate, number of years to
retirement and first year income on Total Lump Sum Needed
3.4
Limitation of Capital Conservation Approach

4.

5.

6.

7.

8.

4.0

5.0

6.0

7.0

8.0

RISK IN RETIREMENT PLANNING

4.1
General definition of risks
4.2
Types of Investment risk
4.3
Subjective risk and investment portfolio in retirement planning
4.4
Risk profiling to determine the degree of risk acceptable to
client

ANALYZING INVESTMENT RISK AND ITS APPLICATION

5.1
Measurement of risk and its application
5.2
The concept of expected return and standard deviation
5.3
Coefficient of variation
5.4
Matching return with investment risk

INVESTMENT FOR RETIREMENT

6.1
Importance of time horizon and impact on risks.
6.2
Discounted cash flow calculation.
6.3
Typical asset classes and their uses.
6.4
Portfolio theory applied to retirement planning
6.4.1 asset/liability
6.4.2 diversification
6.4.3 taxation
6.4.4 asset allocation
6.5
Property as an asset class
6.6
Concept, benefits and limitations of Constant Dollar Cost
Averaging
6.7
Application and benefits of Constant Dollar Plan in Lump Sum
Investment
6.8
Application and benefits of Constant Ratio Plan in Lump Sum
Investment

RETIREMENT SCHEMES FOR INDIVIDUAL

7.1
Types of retirement plan.
7.2
EPF scheme,
7.3
Pension scheme for government servants
7.4
Retirement planning for government servants
7.5
Annuity for retirement planning.

RETIREMENT PLANNING FOR SELF-EMPLOYED AND SMALL

BUSINESSES
8.1
Types of business organization and their characteristics
8.2
Financial obligations of business owners.
8.3
Consequences of death, disability and retirement of business
owners.
8.4
The importance of settling debts before disposal.
8.5
Common vehicles used by business owners in asset
accumulation

9.

10.

11.

9.0

10.0

11.0

MANAGING CONSUMPTION CREDITS IN RETIREMENT

PLANNING
9.1
The Rule of 78
9.2
The computation of hire purchase loan interest and installment
9.3
The concept of Annual Percentage Rate and Effective Annual
Rate
9.4
Credit cards and their costs
9.5
AKPK and its role in debt management
9.6
Cost of purchase under weekly and monthly installment
schemes.

MANAGING DEBT IN RETIREMENT PLANNING

10.1 Computation of housing loan installment
10.2 Evaluate housing loan packages based on Net Present Value
(NPV) and Internal Rate of Return (IRR)
10.3 Refinancing housing loan
10.4 Share refinancing and margin for financing
10.5 Overdraft
10.6 Other types of loan for financing

PRE-RETIREMENT COUNSELING
11.1 Analysis of key factors affecting retirement plan selection
11.1.1 lifestyle
11.1.2 aspirations
11.1.3 family circumstances
11.1.4 insurance
11.1.5 taxation
11.2 Integration of retirement plan with retirement needs.
11.3 On-going needs for financial planning throughout retirement.

Total Hours

42

6.0 TEACHING AND METHOD

Lectures and discussions
7.0

COURSE EVALUATION
Coursework:

60%

Final Examination

40%

TOTAL

100%