SECP Introduces Passive Equity Sub-Fund under Voluntary Pension Scheme

The Securities and Exchange Commission of Pakistan has created a Passive Equity Sub-Fund within the Voluntary Pension Scheme, with pension fund managers set to start offering it on January 1, 2027. Managers are required to offer it together with the existing sub-funds for equity, debt and money market holdings. This gives savers a choice between funds that are actively managed and funds that follow a chosen market index, according to a SECP statement.

Managers have two options for running the product: tracking an index directly, or buying into equity ETFs quoted on the PSX. The ETF route offers access to a broad slice of the stock market, the regulator noted. Fees on the ETF version are capped at 0.75% a year. Where a manager invests in funds run by its own asset management company, no extra management fee applies, which avoids two layers of charges on the same holding.

SECP chairman Dr Kabir Ahmed Sidhu said the product gives retirement savers wider choice and a low-cost path into the stock market. He added that the change is designed to draw more people into the voluntary pension framework and bolster retirement saving over the long run. According to the regulator, the goal is to make low-cost investment choices more available to people saving for retirement.