SECP introduces passive equity option for voluntary pension funds

Profit by Pakistan Today reported that the Securities and Exchange Commission of Pakistan has created a Passive Equity Sub-Fund within the Voluntary Pension Scheme. Fund managers must offer the option from January 1, 2027. It will sit alongside the existing sub-funds that invest in equities, debt and money markets.

Managers can operate the sub-fund by tracking an index directly or by investing in exchange-traded funds listed on the PSX. Under the ETF route, the investment would provide broad exposure to the stock market. The regulator has capped the management fee for such sub-funds at 0.75% per annum, and no extra fee applies when the ETFs belong to the manager's own asset management company.

SECP Chairman Dr Kabir Ahmed Sidhu said the step would widen choices for pension savers and offer a cheaper way into equity exposure. The regulator said the reform seeks to raise participation in the voluntary pension system and build up long-term retirement savings.