SECP proposes reforms to pension system rules

June 13, 2025 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has issued a Consultation Paper proposing amendments to the Voluntary Pension System (VPS) Rules, 2005, aimed at enhancing access and efficiency in Pakistan’s pension framework.

The key proposal is to allow Employer Pension Funds (EPFs) to serve multiple employers under a common fund structure, as per the press release issued today.

This change would enable pension fund managers to pool contributions from various employers, improving cost-efficiency through economies of scale and allowing small and medium-sized enterprises (SMEs) to offer retirement benefits without setting up separate funds.

Beyond previous amendments in VPS Rules, 2005 in February 2024, certain structural limitations continued to restrict the scalability and broader market adoption.

The structure restricted each fund to a specific employer, limiting scalability and creating cost inefficiencies, particularly for smaller employers.

Subsequently, the SECP initiated an impact analysis to assess the efficacy of the VPS Rules in addressing the evolving dynamics of retirement savings.

Various areas of improvement have been resultantly identified to provide operational efficiency, broader pension coverage and to reduce entry barriers for employer participation.

The proposed draft amendments aim to align the regulatory framework more closely with international best practices, eliminate interpretational ambiguities, and foster a stronger culture of retirement savings in Pakistan.

The consultation paper is open for public comments for 15 days from the date of publication.

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