ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has released a Consultation Paper outlining proposed changes to the Voluntary Pension System (VPS) Rules, 2005. The amendments are intended to improve accessibility and efficiency within Pakistan's pension framework.

A primary proposal includes allowing Employer Pension Funds (EPFs) to accommodate multiple employers within a single fund structure. This shift would enable pension fund managers to consolidate contributions from various employers, enhancing cost-efficiency and enabling small and medium-sized enterprises (SMEs) to provide retirement benefits without the need to establish individual funds.

Despite revisions to the VPS Rules in February 2024, structural constraints have persisted, limiting scalability and broader market adoption. The existing framework confines each fund to a specific employer, leading to cost inefficiencies, especially for smaller employers.

To address these issues, the SECP conducted an impact analysis to evaluate the VPS Rules' effectiveness in meeting the changing needs of retirement savings. The analysis highlighted several areas for improvement, including operational efficiency, expanded pension coverage, and reduced barriers to employer participation.

The proposed amendments aim to align Pakistan's regulatory framework with international standards, eliminate ambiguities, and promote a stronger culture of retirement savings across the country. The SECP is inviting public comments on these proposed changes.