AMCs to be allowed to offer annuity payments of pension under the Voluntary Pension System
\n ISLAMABAD
\nThe Securities and Exchange Commission of Pakistan (SECP) has allowed Investment Advisors licensed by the SECP to offer Employer Pension Funds.
\nThis will be done as part of the new \u201cEmployer Pension Funds and allowing Asset Management Companies (AMCs) to offer annuity payments of pension under the Voluntary Pension System\u201d concept, for which SECP has also begun a 14-day public consultation period.
\nThe 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.
\nSimilarly, there shall be no requirement of disclosing the expense ratios and management fee on Mutual Funds Association of Pakistan (MUFAP) and Asset Management Companies\u2019 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.
\nMoreover, 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.
\nA vibrant and financially-inclusive VPS industry will create a pool of long-term patient capital which can deepen the country\u2019s 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.
\nCurrently, 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.<\/p>\n","protected":false},"excerpt":{"rendered":"
AMCs to be allowed to offer annuity payments of pension under the Voluntary Pension System ISLAMABAD 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 \u201cEmployer Pension Funds and allowing Asset Management Companies (AMCs) […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-268945","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n