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.
