VPS sector: 22 pension funds worth Rs 40 billion show promising growth: SECP chief – Pakistan

ISLAMABAD: Chairman of the Securities and Exchange Commission of Pakistan (SECP), Aamir Khan, said on Wednesday that the Voluntary Pension Scheme (VPS) sector has seen promising growth over the years, with 22 pension funds in an amount of 40 billion rupees, having about 45,000 individual investors.

Khan was speaking at a webinar, organized by the SECP to raise awareness of VPS in the corporate sector and among professionals.

“These funds are offered in both conventional and Sharia-compliant investment options,” he said. Khan reaffirmed SECP’s commitment to increasing VPS penetration.

Pointing to the pension situation in Pakistan, the President shared various reforms that the SECP has undertaken to encourage employers and self-employed professionals to participate in the VPS, which include expanding the investment opportunities for the VPS by allowing them to investing in REITs. , private funds and ETFs, facilitating investors by allowing passive investment strategies and flexibility in switching funds and/or fund managers.

The SECP Chairman said that the SECP had recently introduced a number of reforms, including reducing regulatory approvals; expanding investment opportunities for VPSs by allowing them to invest in REITs, private equity and venture capital funds, and ETFs; facilitate investors by allowing passive investment strategies and flexibility in changing fund managers.

The SECP also actively encourages the adoption of this system by employers and is one of the first organizations to have offered the VPS as a retirement savings plan to its employees.

To promote its adoption by employers, we are holding a number of stakeholder engagement sessions, such as this one, to raise awareness of the benefits of VPS, the SECP Chairman added.

Participants discussed challenges and opportunities in the private pension market and made suggestions to improve VPS adoption. Panelists discussed in detail how VPS was a better alternative to conventional/terminal benefit schemes such as provident/gratuitous funds, and could provide the basis for a more sustainable retirement system.

Khalida Habib, Executive Director of Specialty Business Division, updated participants on recent changes to relevant regulations. The regulations have been amended to make doing business easier by reducing the number of regulatory approvals and removing duplication and eliminating redundancies.

The webinar panel discussion included SECP officials, senior professionals, academics and industry leaders, including Dr. Nadeemul Haque, Vice-Chancellor, PIDE, Yasir Qadri, Managing Director, UBL Funds, Abdul Rehman Warraich and Aquil Raza Khoja, former GM Punjab Pension Fund.

The VPS is an advantageous tax scheme open to all Pakistanis, whether employed or self-employed. It also offers an Individual Retirement Account that is unaffected by a job change, i.e. a participant continues to maintain the retirement account instead of leaving with an occupational pension plan at the time of job change.

Copyright Business Recorder, 2022