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SECP forms body to work out plan for development of private pension market

January 11, 2021

/ by pyro gyro

SECP forms body to work out plan for development of private pension market

ISLAMABAD, January 8: While gearing up its efforts to develop the private pension and annuity market in Pakistan, the Securities and Exchange Commission of Pakistan (SECP) has formed a Pension and Annuity Working Group (PAWG). The Group, having representation of the regulator, Asset Management Companies (AMCs), life insurance companies, and the actuarial profession of Pakistan, is assigned to prepare a roadmap for developing country’s private pension and annuity market.

A developed pension market will also help to deepen the market for much-needed long-term capital instruments, while the annuity market has been a missing link between the voluntary pension and insurance sector of Pakistan.

The Voluntary Pension Scheme (VPS) framework that was introduced in 2005, still has a very low uptake from the industry; recorded PKR 33 billion as of Oct 2020 in assets under management. This represents only 2% of the overall NBFC sector and accounts for only 30,000 VPS investor accounts.  Furthermore, since the life insurance sector has not been engaged in the distribution of VPS products so far, the life-contingent annuity market is almost non-existent in Pakistan. This indicates a huge potential of the VPS market and requires immediate focus to develop this important market.

It is expected that the recommendations of the Group will pave the way for the implementation of a sound roadmap for the development of the private pension market that will not only enhance financial inclusion but also provide much-needed depth to the capital market in Pakistan.

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