SECP introduces Passive Equity Sub-Fund under VPS from Jan 2027

October 07, 2026 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has introduced a Passive Equity Sub-Fund under the Voluntary Pension Scheme (VPS), which pension fund managers will be required to offer from January 1, 2027.

The new sub-fund will provide pension savers with a simple and low-cost avenue to invest in the stock market and will be offered alongside the existing Equity, Debt and Money Market Sub-Funds.

The Passive Equity Sub-Fund will give savers the option to invest in passive equity funds that track a specified market index, in addition to actively managed equity funds.

Pension fund managers may operate the Passive Equity Sub-Fund either by directly tracking a market index or by investing in Exchange Traded Funds (ETFs). Under the ETF-based approach, managers may invest in equity ETFs listed on the Pakistan Stock Exchange (PSX), offering diversified exposure to the equity market.

The management fee for an ETF-based Passive Equity Sub-Fund will be capped at 0.75% per annum. Where a pension fund manager invests in ETFs managed by its own asset management company, no additional management fee will be charged, preventing the application of two layers of management fees on the same investment.

SECP Chairman Dr. Kabir Ahmed Sidhu said the introduction of Passive Equity Sub-Funds will provide pension savers with greater choice in managing their retirement savings and offer a cost-efficient route to participate in the stock market.

He said the reform will support wider participation in the voluntary pension system and strengthen long-term retirement savings.

The measure is aimed at expanding accessible and cost-efficient investment options for long-term retirement savings and strengthening Pakistan’s voluntary pension system.

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