ISLAMABAD: In another first at the Securities and Exchange Commission of Pakistan (SECP), a life insurance company namely the Postal Life Insurance Company Limited, has been granted permission to manage private pension funds under the Voluntary Pension System (VPS).
Private pension funds under the VPS are regulated by the SECP in terms of VPS Rules, 2005, and are self-contributory, tax-advantaged long-term saving schemes, whereby individuals can voluntarily contribute to a pension fund during their working life to have a regular income after retirement. The employer can also contribute on behalf of their employees.
Considering the need and importance of private pensions in Pakistan’s context, the SECP has undertaken various regulatory reforms for the development of this sector. This includes revamping the investment framework and raising awareness of the need for private pensions, especially in the case of private-sector workers. This has translated into a year-on-year (YoY) growth of 27 per cent in assets under management from Rs31.4 billion to Rs39.7 billion as of June 30, 2021, and the inclusion of the first life insurance company to undertake pension fund management services.
The SECP aims to continue its reform agenda for the development of the private pension and annuity market in Pakistan and is currently working on the development of an annuity regulatory framework for the asset management sector and bringing structural reforms in VPS in line with the 401(K) plan of the United States.
The SECP is also engaged with the Mutual Fund Association of Pakistan (MUFAP), professional associations and other stakeholders to corroborate efforts for increasing awareness of VPS.