- Advertisement -
ISLAMABAD, Mar 4 (APP): The Securities and Exchange Commission of Pakistan (SECP) here on Monday held a capacity-building workshop for journalists, focusing on the enhanced scope of the Voluntary Pension System (VPS) regulatory framework.
The event aimed to raise public awareness and understanding of the Voluntary Pension System, said a news release.
Executive Director, Specialized Companies Division Khalida Habib explained to the participants that the regulatory framework has been amended to allow employers to offer fully funded defined contribution pensions to their employees in a fail-safe environment.
This change was made through amendments in the VPS Rules, 2005 and Non-Banking Finance Companies and Notified Entities (NBFC&NE) Regulations, 2008.
This allows group companies, holding companies, federal governments, and provincial governments to provide comprehensive post-retirement income solutions.
Significant amendments in VPS rules include:
1. Evolve and enhance the scope of the VPS framework by allowing employers, both in the public and private sectors, to offer fully funded defined contribution pensions in a fail-safe environment to their workforce.
2. Introduction of professional management of post-retirement savings of the (employees), both in the public and private sector, by SECP licensed/registered entities with a minimum rating of “AM2”.
3. Graduating away from the traditional Pay-As-You-Go Pensions with a defined benefit structure, which has remained a burden on the government exchequer, the largest employer in the country in terms of funding the pension bill out of the current expenditure.
4. Ensuring that pension liabilities in the future are fully funded with the benefit of accumulation through regular contributions to avoid defaults directly hurting the old-age beneficiaries.
5. Transforming the regulatory framework to steer the overall pension savings paradigm of the country towards global best practices.
6. Aligned the regulatory framework with SECP’s vision to meet the evolving financial needs of the modern workforce.
7. Amendments in the VPS Rules, 2005 along with corresponding amendments in the NBFC&NE Regulations, 2008 have been notified after a careful assessment of the needs for a vibrant and futuristic pension landscape in Pakistan.
8. Extensive engagements with sector and global experts prior to introducing flexibility for the Employer Based Pensions within the framework of VPS which is the only defined contribution-based pension platform in Pakistan.
9. Allowing flexibility to the workers/employees to save and grow their investments according to their individual risk profiles and old age income needs.
10. Further strengthen the overall risk framework of VPS to ensure the quality of services and investment management, a minimum Asset Manager Rating criterion of ‘AM2’ has been introduced for Asset Management Companies, Life Insurance Companies and newly allowed investment advisors who wish to offer Employer Pension Funds under the VPS.
11. Enhanced inclusiveness of the VPS Framework by allowing non-resident Pakistanis holding Pakistan-origin cards to save for retirement in Pakistan and benefit from what is offered to the resident Pakistanis.
12. Bring Pakistan to par with well-established pension solutions like 401(k) retirement plans in the USA.
13. Revolutionizing but also preserving the inherent spirit of VPS to allow self-employed or informal sector workforce to save for their retirement age financial needs while formally including the formal employment sector.