The Securities and Exchange Commission of Pakistan (SECP) has issued a Consultation Paper seeking public input on proposed amendments to the Voluntary Pension System (VPS) Rules, 2005. These amendments are part of the regulator’s broader effort to improve accessibility, scalability, and cost-efficiency in Pakistan’s pension framework, particularly for small and medium-sized enterprises (SMEs).
The headline proposal in the draft is the introduction of multi-employer participation under Employer Pension Funds (EPFs). Currently, the VPS Rules restrict each pension fund to a single employer, which has created cost inefficiencies and scalability issues. This has proven to be a significant barrier for smaller employers who may not have the resources or workforce size to set up and maintain separate pension funds for their employees.
Under the proposed changes, EPFs would be permitted to serve multiple employers under a unified fund structure. This shift would allow pension fund managers to pool contributions from various employers, enabling better cost management and broader accessibility. In turn, it would encourage more SMEs to offer retirement plans without bearing the administrative and financial burden of standalone pension funds.
Although the SECP had made prior amendments to the VPS Rules in February 2024, certain structural limitations continued to hamper market growth and the widespread adoption of voluntary pension schemes. In response to these challenges, the SECP initiated a detailed impact analysis to examine the effectiveness of the current regulatory environment in supporting evolving retirement savings needs.
The impact analysis highlighted several operational inefficiencies and regulatory barriers that limited the broader market participation in pension schemes. Based on the findings, the SECP identified specific areas of improvement aimed at reducing entry barriers, expanding pension coverage, and aligning Pakistan’s pension regulatory framework with international best practices.
The draft amendments also seek to remove ambiguities in rule interpretation that have previously led to operational challenges and hesitations in market adoption. By addressing these concerns, the SECP hopes to create a more inclusive and streamlined retirement savings ecosystem that supports long-term financial security for a wider segment of the population.
Public comments on the consultation paper are invited for a period of 15 days from the date of publication. The SECP encourages stakeholders, including employers, pension fund managers, financial institutions, and the general public, to provide their feedback to help refine the proposed changes and ensure they address real-world needs and market dynamics.
These reforms mark a significant step in modernizing Pakistan’s pension landscape, with the potential to enhance retirement planning options for employees and offer sustainable, cost-effective solutions for employers across the country.
