VPS sector: 22 pension funds worth Rs40bn show promising growth: SECP chief

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Chairman Aamir Khan on Wednesday said the Voluntary Pension System (VPS) sector, over the years has exhibited promising growth, with 22 pension funds amounting to Rs40 billion, having around 45,000 individual investors.

Khan was speaking at a webinar, organised by the SECP to increase awareness about the VPS in the corporate sector and among professionals.

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

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 the VPS, which include broadening of investment avenues for the VPS by allowing them to invest in the REITs, private funds, and ETFs, facilitating investors by allowing passive investment strategies, and flexibility in changing fund and/or fund manager.

The SECP chairman stated that the SECP has recently introduced a number of reforms, including reducing regulatory approvals; broadening investment avenues for VPS by allowing them to invest in REITs, PE and VC funds, and ETFs; facilitating investors by allowing passive investment strategies and flexibility in changing fund manager.

The SECP is also actively encouraging the adoption of this scheme by employers, and are among the first few organizations that have offered VPS as a retirement saving scheme to its employees.

To promote its uptake by employers, we are arranging a number of stakeholder engagement sessions, such as this one, to create awareness about the benefits of VPS, the SECP chairman added.

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 the VPS was a better alternative to conventional/terminal benefit schemes like provident/gratuity funds, and could provide the basis for a more sustainable pension system.

Khalida Habib, executive director Specialized Companies Division 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 Dr Nadeemul Haque, vice chancellor, PIDE, Yasir Qadri, chief executive, UBL Funds, Abdul Rehman Warraich, and Aquil Raza Khoja, former GM Punjab Pension Fund.

The 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, ie, a participant continues to retain the pension account as opposed to starting afresh with an occupational retirement plan at the time of switching jobs.

Copyright Business Recorder, 2022