KARACHI (October 12 2003): The Securities and Exchange Commission of Pakistan (SECP) is developing necessary regulatory work to promote growth of pension funds which would enable and encourage the establishment of individually capitalised Pension Saving Accounts (PSA) managed by professional managers.
This was stated by Finance Minister Shaukat Aziz while addressing the formal launching ceremony of Meezan Islamic Fund here on Saturday.
He said the funds would be placed with the private sector fund managers. The fund managers would manage the recognised pension funds that would adhere to the regulator's investment policy.
The funds accumulated in the PSA of the holder or affiliate will be available for investment into an approved annuity scheme.
The affiliate would be allowed to select and switch his account to funds or annuities of his choice.
Contributions to the PSA will be made at par with tax laws applicable to provident funds.
This system will follow a defined contribution plan with a fixed minimum contribution by the employee and the employer.
The retirement or pension benefits under a defined contribution plan will be determined by the contributions to the Personal Pension System and the investment earnings thereon.
“The Government is committed to facilitate this process by providing whatever support would be required to make it a success,” said the minister.
All this will provide tremendous opportunity for further development of mutual fund industry, he added.
The government has already notified rules for investment by provident funds in mutual funds and similar rules will be framed for pension funds shortly.
The role of asset management has become all the more important in the backdrop of falling interest rates and imposition of restrictions on the institutions to invest in national saving schemes.
“I would also encourage the mutual fund industry to come forward and to create real assets in the economy by creating specific funds in housing sector,” said Shaukat.
He said the banks have focussed on high-income customers, while there is need to address the requirement of lower income and middle class people.
While comparing with the American market, the minister said that by year-end 2002, mutual funds accounted for 2.1 trillion dollars, or 21 percent of the 10.2 trillion dollars US retirement market.
“In Pakistan, mutual funds have not so far catered to the retirement savings market even though the potential for growth in assets of mutual funds is enormous,” said the minister.
Chairman, Al Meezan Investment Management Ltd, Irfan Siddiqui said the MIF is another addition to the range of products being offered by Meezan Bank.
It is being launched with a clear and well-defined investment objective and it will only invest in Shariah-compliant instruments, said Siddiqui.
The public offering will commence from October 13, 2003, and unit prices will be announced by Al Meezan Investment Management on daily basis at the close of business day which will be applicable for the following business day.
The Offer and Redemption Price applicable for October 13 is Rs 51.4.
During October 13 to 17, the management is offering a special opportunity to investors to acquire the units in at Net Asset Value. A sale charge of 2 percent will be applicable after October 17.
Zaigham Mahmood Rizvi, Chairman MUFAP said the MIF besides providing all the other benefits associated with mutual funds, gives the added comfort of being backed by renowned sponsors, professional fund managers, credible Shariah Advisors and a carefully selected portfolio of investments which ensures conventional prudence as well as Shariah compatibility.
Mohammad Shoaib, Chief Executive Al Meezan Investment Management Ltd, explained the working and methodology involved in the fund management.