Securities and Exchange Commission of Pakistan (SECP) Chairman Aamir Khan has reaffirmed SECP’s commitment to increasing the penetration of the Voluntary Pension System (VPS).
He was speaking at a webinar, organized by the SECP to increase awareness about VPS in the corporate sector and among professionals.
Pointing towards the pension situation in Pakistan, the chairman shared various reforms that the SECP has undertaken to encourage both employers and self-employed professionals to participate in VPS, which include broadening investment avenues for VPS by allowing them to invest in real estate investment trusts (REITs), private funds, and exchange-traded fund (ETFs), facilitating investors by allowing passive investment strategies, and flexibility in changing fund or fund manager.
The participants discussed the challenges and opportunities in the private pension market and provided suggestions to improve the uptake of VPS. The panelists discussed in detail how VPS was a better alternative to conventional benefit schemes like gratuity funds and could provide the basis for a more sustainable pension system.
Executive Director Specialized Companies Division Khalida Habib briefed the participants about recently introduced amendments in the relevant regulations. The regulations were amended to provide ease of doing business by reducing the number of regulatory approvals and removing duplications and eliminating redundancies.
The webinar discussion panel comprised SECP officials, senior professionals, academics and industry leaders including Vice-Chancellor Pakistan Institute of Development Economics (PIDE) Dr. Nadeem Ul Haque, United Bank Limited (UBL) Funds Chief Executive Yasir Qadri, former Punjab Pension Fund General Manager Aquil Raza Khoja, and Abdul Rehman Warraich.
VPS is a tax-advantaged scheme open to all Pakistanis, whether salaried or self-employed. It also provides an individual retirement account that is not affected by a change in employment, i.e. a participant continues to retain the pension account as opposed to starting afresh with an occupational retirement plan at the time of switching jobs.
Pakistan’s VPS sector, over the years, has exhibited promising growth, with 22 pension funds amounting to Rs. 40 billion, having around 45,000 individual investors.
