ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Tuesday issued new investment and allocation policy for the pension funds authorised under the Voluntary Pension System.
The SECP has revealed the new policy through issuance of a circular number 12 of 2021.
This circular shall come into force with immediate effect and existing Pension Fund Managers shall ensure compliance with these requirements within 90 days of issuance of this circular.
According to the SECP's investment policy, the investment policy covers both conventional and Shariah-compliant Pension Funds and the investment limits are relevant for both kinds of pension funds unless specifically mentioned differently in the policy stated herein.
The Pension Fund shall consist of three or more sub-funds.
A Pension Fund Manager (PFM) shall specify in the offering document the type of securities, each sub-fund shall invest in, and the risks associated with Investment in such securities.
A PFM shall invest assets of the Pension Fund in a transparent, efficacious, prudent, and sound manner.
The PFM shall have at least one investment committee (IC) which shall be responsible for selecting and developing appropriate investment and risk management strategies for the proper performance of the pension fund.
The IC will also be responsible for developing internal investment restrictions, limits and restrictions for pension funds and in case same IC takes decisions for both mutual funds and pension funds, the decision taken for each kind of funds shall be separately identified and recorded in the minutes.
A PFM shall carry out necessary due diligence for executing investment and disinvestment decision(s) in a security. Rating of an issue or the issuer, wherever mentioned herein below shall be only one of the factors to be considered by a PFM and it shall in no way be construed as a recommendation or permission of the Commission to any PFM to invest in any security solely on the basis of rating. However, a PFM shall ensure that the security and the issuer meet the minimum rating scale referred in the Investment Policy to stay qualified for continued investment.
Under the allocation policy, the SECP revealed that a PFM shall offer at least four allocation schemes for a participant to choose from, based on the laid down criteria.
Given the laid down criteria, a participant will choose the percentage of contribution) that go in to each sub-fund for individual allocation schemes. The participant may choose to freeze his portfolio allocation and percentages at a point in time and the allocation and percentages may be changed for future contributions, the SECP added.
Copyright Business Recorder, 2021