ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments in Voluntary Pension System Rules, 2005, aiming to align the regulatory framework more closely with international best practices, eliminate interpretational ambiguities, and foster a stronger culture of retirement savings in Pakistan.
The consultation paper is being published for the purpose of eliciting public comments on the draft amendments proposed in Voluntary Pension System Rules, 2005.
According to the SECP, the VPS Rules, 2005 were last amended through S.R.O. 298(I)/2024, dated February 22, 2024.
Major amendments entailed the introduction of the Employer Pension Fund, which enabled organisations to set up dedicated pension funds managed by registered pension fund managers for the exclusive benefit of their employees. This marked a structural shift in Pakistan’s retirement landscape by allowing employers to make systematic, tax-efficient contributions toward their employees’ retirement, improving transparency, portability, and long-term fund accumulation under a regulated framework.
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Subsequent to the aforesaid notification, the SECP has initiated an impact analysis to assess the efficacy of the VPS Rules in addressing the evolving dynamics of retirement savings.
Various areas of improvement have been resultantly identified to provide operational efficiency, broader pension coverage, and to reduce entry barriers for employer participation.
The proposed draft amendments aim to align the regulatory framework more closely with international best practices, eliminate interpretational ambiguities, and foster a stronger culture of retirement savings in Pakistan.
SECP found that while the introduction of Employer Pension Funds (EPFs) under the VPS Rules, 2005 marked a significant milestone in expanding the retirement savings framework, certain structural limitations continue to restrict their scalability and broader market adoption. The current structure restricts each fund to a specific employer—limiting scalability and creating cost inefficiencies, particularly for smaller employers.
Opening EPFs to multiple employers could address these inefficiencies by allowing pension fund managers to pool contributions from various employers into a single fund structure.
This would not only improve cost-effectiveness through economies of scale but also enable smaller employers to offer retirement benefits without bearing the full burden of establishing a dedicated fund, according to the SECP.
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Additionally, opening the existing common fund structure to employer contributions addresses a critical gap in the current system by offering a streamlined channel for employer involvement without requiring new fund formation. This approach leverages existing regulatory and operational infrastructure to provide immediate access for employers—particularly those with smaller workforces or limited administrative capacity.
By enabling contributions within an already functioning and compliant framework, it minimizes setup costs, reduces entry barriers, and ensures consistency in oversight. This can encourage broader and faster adoption of retirement savings, improve fund scale and efficiency through aggregated inflows.
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