it will stimulate growth of pension funds, financial inclusion
The Securities and Exchange Commission of Pakistan (SECP) has revamped regulatory framework for Voluntary Pension System to ensure protection for the elderly, growth of pension funds and greater financial inclusion.
“Cognizant of the challenges to the growth and development of voluntary funded pension system in Pakistan, the Securities and Exchange Commission of Pakistan (SECP) has revamped the Voluntary Pension System (VPS) Rules, 2005, facilitating greater pension penetration in Pakistan,” the company regulator said in a press release on Wednesday.
The SECP said private pension funds are professionally managed savings-cum-investment vehicles, that enable salaried and self-employed Pakistanis (including non-resident Pakistanis) to contribute during their working life, to accumulate savings available after retirement. The reforms, while maintaining the flexibility of individualized asset allocation, have introduced a number of measures including easier transferability between pension fund managers and funds, added flexibility to fund managers to allocate various expenses within the total permissible expense limit, it said. This will allow pledging of pension account against employer loan and removal of SECP’s prior approval for VPS advertisements.
Furthermore, in order to streamline adjustments in requirements over time, matters related to pricing, obligations and performance of pension funds have been shifted from Voluntary Pension System Rules to the Non-Bank Finance Companies Regulations, 2008.
These reforms constitute an important step forward in ensuring protection for the elderly, while safeguarding its sustainability in the future, the SECP said. It is expected that the revamped framework will not only pave the way for the growth of private pension funds, but also enhance financial inclusion and provide much-needed depth to Pakistan’s capital markets.