Introducing pension reforms: Aurangzeb asks SECP to make concerted efforts

ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb Wednesday directed the Securities and Exchange Commission of Pakistan (SECP) to maintain close liaison with the relevant government departments for effective introduction of pension reforms in the country.

The SECP gave a detailed briefing to the Finance Minister on SECP’s initiatives including pension reforms during the minister’s visit to the SECP Head Office here on Wednesday.

During the visit, he was briefed by Chairman SECP Akif Saeed and the management team on upcoming initiatives, key reforms and achievements to date.

He was briefed on efforts towards ease of doing business in Pakistan and reaping the benefits of advancement in technology through regulatory reforms, digitalization of services and access to finance. He was also briefed on areas related to market development and innovation such as regulatory sandbox and efforts to promote startups. The Minister expressed keen interest in SECP’s initiatives towards sustainability reporting and investor education & protection and expressed satisfaction on SECP initiative to launch the ESG Sustain Portal.

The minister appreciated the steps being taken by SECP to provide one window solution to companies and digital filing of documents and other initiatives aimed at facilitating investors such as Central Gateway Portal and Emlaak Financials. While acknowledging the contribution of SECP in launch of Government Debt Securities (GDS), he highlighted the need to create liquidity in the secondary market.

He stressed the need for creating awareness regarding positive initiatives taken by SECP to provide maximum benefit to stakeholders. He also advised SECP to maintain close liaison with the government for effective introduction of pension reforms and to work with other regulatory bodies to provide seamless and efficient services in the financial sector. He assured SECP of the Government’s support on the legislative reforms.

He was informed that as of June 30, 2023, the total assets under management of 24 pension funds managed by 13 Pension Fund Managers (Voluntary Pension Systems) stood at Rs. 50.25 billion. This asset class exhibited a robust growth of 20.67% in the year under review.

The SECP has undertaken an extensive engagement process involving more than 250 industry stakeholders and employers. This inclusive approach encompassed prominent multinational companies, conglomerates, private sector companies, and professionals. Drawing from the valuable feedback received, a comprehensive framework was developed for the launch of employer-specific pension funds.

The VPS Rules of 2005 have been amended to allow Asset Management Companies (AMCs) to offer annuity products to participants upon retirement. These changes underwent a thorough process of public consultations, making individuals holding Pakistan Origin Cards eligible for these benefits. The draft amendments were submitted to the MOF for approval. The Government of Khyber Pakhtunkhwa has adopted the VPS for new employees joining after July 1, 2022. This strategic more is expected to bring approximately 25,000-30,000 new participants this year, further expanding the VPS’s reach and impact.

Another initiative included facilitating Pension Funds to invest in PF units as per already allowed thresholds, with comprehensive reforms communicated through press release, social media and direct engagement with Private Fund Management Companies (PFMCs).

To facilitate business operations and promote the adoption of – VPS among government employees in KPK, a flexible regulatory framework has been established. This framework enables the launch of pension fund schemes tailored to the needs of KPK government employees. Accordingly, SECP has granted clearances and NoCs to 9 AMC, allowing them to launch 16 pension fund schemes for the KPK employees. This initiative simplifies the process and enhances retirement planning options for KPK government personnel.

In the voluntary pension system, Islamic pension funds now comprise 24 pension funds that collectively manage assets valued at Rs. 50.26 billion. Notably, this sector witnessed a substantial growth of 20.70% during the year. In terms of both size and quantity within the broader sector, Islamic pension funds constitute an impressive 64.90% and 54.17%, respectively, SECP added.

Copyright Business Recorder, 2024