KP reforms public pension scheme

PESHAWAR: The Khyber Pakhtunkhwa (KP) government has launched a new pension system for its civil servants, becoming the first province in Pakistan to shift from a traditional defined-benefit scheme to a voluntary pension system (VPS), a statement said on Wednesday.

The new pension system, which is regulated by the Securities and Exchange Commission of Pakistan (SECP), is applicable to those employees who have joined the government service in the province on or after June 7, 2022.

It is expected that around 33,000 civil servants of KP will join the new pension system. The KP government, in collaboration with the Mutual Funds Association of Pakistan (MUFAP), organized a conference on Wednesday to celebrate the successful transition of the new pension system and to highlight its benefits for the participants and the provincial economy.

The SECP chairman, Akif Saeed, said that the new pension system is a significant step towards efficient management of the fiscal space, which has been greatly burdened by the growing public pension bill.

He emphasised the need to expand the VPS framework's scope to meet the retirement benefits needs of all the departments of the federal and provincial governments. The secretary Finance of KP, Amer Sultan Tareen, praised the SECP's role in the smooth implementation of the pension reforms in KP.

He said that the provincial pension expenditure had increased from Rs878 million in fiscal year 2003-04 to Rs132 billion in fiscal year 2023-24, accounting for more than 12 percent of the total consolidated budget.

Tareen said the launch of a funded, professionally managed contributory pension framework was necessary for the provincial government's sustainability. The SECP Commissioner, SCD, Mujtaba Ahmed Lodhi, emphasized the need for pension fund managers and trustees to modernize to meet futuristic demands.

The CEO of MUFAP, Mashmooma Z. Majeed, explained the investor journey from joining to retirement and post-retirement benefits. The KP government has engaged 12 pension fund managers to offer a range of investment options to the participants, including ABL Asset Management Company Limited, AL Habib Asset Management Limited, Al Meezan Investment Management Limited, Alfalah Asset Management Limited, Atlas Asset Management Limited, Faysal Asset Management Limited, HBL Asset Management Limited, JS Investments Limited, MCB Investment Management Limited, National Investment Trust Limited, NBP Fund Management Limited and UBL Fund Managers Limited.