The Securities and Exchange Commission of Pakistan (SECP) has directed all pension fund managers (PFMs) to ensure that no front-end fee (sales charges) is charged if a participant directly or through his/her employer approaches a PFM for contribution or contribute online via website. In this regard, the SECP has issued instructions to Chief Executives of all PFMs, Mutual Funds Association of Pakistan and Trustees of Pension Funds, here Monday.
The SECP has directed all PFMs registered under the rules to ensure that where constitutive document or offering document of a pension fund permits charging of front-end free, back-end fee or contingent fee (sales charges), the PFMs shall clearly disclose the maximum rate of front-end fee (sales charge) that is being charged to a participant at the time of contribution. The PFM shall also obtain duly signed acknowledgement from a participant to ascertain that all the terms and conditions along with details of sales charge to be deducted, have been read and understood by him/her.
The PFM shall issue to a participant, within 48 hours of the realisation of funds, break-up of total contribution, front-end free charged and the net amount transferred into a pension fund or his/her behalf as per laid down format. A PFM shall ensure that no front-end fee is charged if a participant directly or through his/her employer approaches a PFM for contribution or contribute online via website or makes any subsequent contributions.
For the purpose of this directive, sales charge means the amount deducted at the time of contribution into or redemption from a pension fund. However, the fee (if any) charged upon redemption, which shall form part of a pension fund property, shall not be construed as sales charge. The SECP's directive shall come into force with immediate effect. Any non-compliance shall be dealt with in accordance with prevalent regulatory framework, the SECP added.