SECP To Allow Licensed Investment Advisors To Offer Employer Pension Funds
Mohammad Ali (@ChaudhryMAli88) Published June 29, 2022 | 06:30 PM
ISLAMABAD, (UrduPoint / Pakistan Point News - 29th Jun, 2022 ) :The Securities and Exchange Commission of Pakistan (SECP) has allowed investment advisors licensed by the SECP to offer Employer Pension Funds.
This will be done as part of the new "Employer Pension Funds and allowing Asset Management Companies (AMCs) to offer annuity payments of pension under the Voluntary Pension System" concept, for which SECP has also begun a 14-day public consultation period, said a press release issued here.
The newly introduced concept of Employer Pension Funds will address the reluctance of employers to offer VPS as well as provide greater portability and flexibility to participants.
Retaining the Primary structure of pension funds, the Employer Pension Funds will have flexible seed capital requirements as well as bilaterally agreed expense ratios with no sales load chargeable to participants.
Similarly, there shall be no requirement of disclosing the expense ratios and management fee on Mutual Funds Association of Pakistan (MUFAP) and Asset Management Companies' websites, along with removal of requirement to publish rankings on MUFAP web site.
Through these amendments, the practice of charging selling and marketing expenses to pension funds shall be discontinued.
Moreover, in addition to Life Insurance Companies that are mandated to offer life contingent annuities to VPS participants at the time of their retirement, Asset Management Companies shall also be able to offer such annuities to VPS participants subject to conditions laid down by the Commission.
A vibrant and financially-inclusive VPS industry will create a pool of long-term patient capital which can deepen the country's capital markets, improve the current saving rate of 4.5% of Gross Domestic Product in Pakistan and provide a reliable stream of income for retirees.
Currently, the VPS industry in Pakistan comprises of 12 registered pension fund managers managing 21 pension funds in conventional and shariah compliant mode with assets under management of Rs. 39.6 billion. Presently, only around 45,000 individuals participate in the voluntary, tax advantaged, contributory pension system established under the Voluntary Pension System Rules, 2005.
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