ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Wednesday revealed that the total assets of the voluntary pension fund industry are over Rs31 billion with more than 4,300 participants.

The SECP has released five-year comparative performance of Private Pension Funds as on June 30, 2020, total assets of voluntary pension fund industry are over Rs31 billion.

The industry has witnessed a significant increase of Rs5 billion (around 19 percent) in one year (since June 30, 2019).

Investors preferred Shari’ah-compliant pension products over conventional products as out of 31 billion rupees assets of pension funds, over Rs20 billion are invested in Shari’ah-compliant pension funds.

Furthermore, almost 35 percent of the pension fund industry is invested in the equity market.

The pension fund managers, depending on the asset class, charge fee ranging from 0.5 percent to 1.5 percent, of Assets under Management, per annum from the pension funds. Further, the pension fund managers can charge sales load up to three percent of the contribution.

However, the SECP has issued a directive restraining pension fund managers to charge sales load up to 1.5 percent of the contribution if an investor carries out transaction online or through a website.

Private pension funds were introduced in 2007 under the Voluntary Pension System Rules, 2005.

At present there are 19 pension funds operating in the market, out of which 10 are Shari’ah-compliant and nine are conventional pension funds.

These funds are managed by 10 pension fund managers who have several years of experience in managing pooled investments.

The pension funds provide participants with options to invest in securities and commodities.

Participants can choose allocation policies suiting their risk and return preferences.

All persons holding a valid CNIC are eligible to become members of pension funds and accumulate savings for their retired life.

Tax credit of up to 20 percent of taxable income can be availed upon investment in pension funds and persons above 40 years of age can avail even higher tax benefits under provisions of the Income Tax Ordinance, 2001. Participants have the flexibility to choose retirement age between 60 to 70 years.

On retirement, they can withdraw up to 50 percent of the accumulated balance in lump-sum and the remaining 50 percent in installments, as pension, the SECP added.

Copyright Business Recorder, 2020