SECP bars pension funds from charging sales load
Private pension fund industry grew 32% in FY17, assets reach Rs25b
PHOTO: SECP
KARACHI:
The private pension fund industry grew over 32% in fiscal year 2016-17 and total assets of the industry crossed Rs25 billion.
The growth in the pension industry has primarily resulted from an increase in participation by general investors and better performance of the stock market.
Private pension funds have more than 18,000 participants and nearly 60% of their assets are invested in the equity market, according to a press release issued on Thursday.
Investors preferred Shariah-compliant pension products over conventional products. Out of the Rs25-billion assets of pension funds, over Rs16 billion comprise Shariah-compliant securities.
Private pension funds were introduced in 2007 under the 2005 Voluntary Pension System Rules. At present, 19 pension funds are operating in the market, of which 10 are Shariah-compliant and nine are conventional.
These funds are managed by 10 fund managers, who have vast 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. Fund managers, depending on the asset class, charge fee ranging from 0.5% to 1.5% per annum. They can also charge sales load up to 3% of the contribution.
However, the Securities and Exchange Commission of Pakistan (SECP) has issued a directive, restraining pension fund managers from charging sales load if investors themselves approach the fund manager for investment.
All persons holding CNIC can join pension funds and get tax credit of up to 20% of taxable income. People above 40 years of age can get even higher tax benefits.
Participants can choose the retirement age between 60 and 70 years. On retirement, they can withdraw up to 50% of the accumulated balance in lump sum and the remaining 50% in installments as pension.
Published in The Express Tribune, August 4th, 2017.
The private pension fund industry grew over 32% in fiscal year 2016-17 and total assets of the industry crossed Rs25 billion.
The growth in the pension industry has primarily resulted from an increase in participation by general investors and better performance of the stock market.
Private pension funds have more than 18,000 participants and nearly 60% of their assets are invested in the equity market, according to a press release issued on Thursday.
Investors preferred Shariah-compliant pension products over conventional products. Out of the Rs25-billion assets of pension funds, over Rs16 billion comprise Shariah-compliant securities.
Private pension funds were introduced in 2007 under the 2005 Voluntary Pension System Rules. At present, 19 pension funds are operating in the market, of which 10 are Shariah-compliant and nine are conventional.
These funds are managed by 10 fund managers, who have vast 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. Fund managers, depending on the asset class, charge fee ranging from 0.5% to 1.5% per annum. They can also charge sales load up to 3% of the contribution.
However, the Securities and Exchange Commission of Pakistan (SECP) has issued a directive, restraining pension fund managers from charging sales load if investors themselves approach the fund manager for investment.
All persons holding CNIC can join pension funds and get tax credit of up to 20% of taxable income. People above 40 years of age can get even higher tax benefits.
Participants can choose the retirement age between 60 and 70 years. On retirement, they can withdraw up to 50% of the accumulated balance in lump sum and the remaining 50% in installments as pension.
Published in The Express Tribune, August 4th, 2017.