KARACHI: The State Bank of Pakistan (SBP) has allowed non-resident Pakistanis to contribute to pension funds.
In a circular issued to Banks/Authorized Dealers (ADs) on 05 August 2022, the SBP stated that to enhance the value proposition of the NRP Rupee Value Account (NRVA) and facilitate Non-Resident Pakistanis (NRPs), it has been decided to allow NRPs to contribute to pension funds, licensed by the Securities and Exchange Commission of Pakistan (SECP) under the Voluntary Pension Fund Rules 2005 (VPS Rules), through their authorized dealers. As a result, the following changes to the exchange regulations have been made:
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Paragraph 8 (iv)(a) of Chapter 8 – the following new subparagraph has been added:
8. Contribution in pension fund units permitted under VPS rules, under the direction of pension fund managers (PFMs) registered with the SECP.
Paragraph 8 (iv)(a) of Chapter 8 – the existing text has been amended as follows:
The transfer of funds for the above investments will be authorized by the DAs through the special instructions received from the holder of the NRVA in this regard. For the investments/contributions mentioned in points (1),(2),(5),(6),(7) & (8) above, the procedure prescribed for investment/divestment/redemption in chapter 20 of the Foreign Exchange Manual shall be while for the investments mentioned in (3) above, the terms and conditions prescribed in Appendix-A, at the end of this chapter, shall be followed.
Paragraph 6(B) of Chapter 20 – the following new clause has been added:
(IIIC) Issuance of pension fund units authorized by the SECP under the Voluntary Pension Funds Rules 2005, under the direction of pension fund managers (PFMs) registered with the SECP to undertake pension fund scheme.
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Paragraph 9 of Chapter 20 – the following new clause has been added:
(E) Contribution in approved Pension Fund Units
NRP Rupee Value Account (NRVA) holders are permitted to contribute to pension funds, authorized under the Voluntary Pension Funds Rules 2005, under the direction of Pension Fund Managers (PFMs) registered with the SECP, through an NRVA opened with an Authorized Dealer (AD) in Pakistan. Such a contribution can be made in the following ways:
Funds available in the NRVA may be used for contribution to pension funds and payment of such contribution may be debited from the account at the specific request of the holder of the NRVA for subsequent credit to the bank account of the pension fund trustee. pension. The net asset value (NAV) attributed to each contribution together with a copy of the payment instrument/details must be provided by the GFP to the DA on the same day. GFP must also send an account statement to the DA within 24 hours of realizing the funds.
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In the event of a transfer of the individual pension account of the holder of the NRVA from one pension fund to another pension fund of the same GFP, the GFP will share the details of the transfer operation (including all the details declared for the transfer from one pension fund to another fund) for their DA file.
In the event of a transfer of the NRVA holder’s individual pension account from one GFP to another GFP, the GFP will share the details of the transfer transaction (including all details as reported for the transfer from one GFP to another GFP) for AD registration.
Redemption proceeds may be credited to the respective NRVA, received from the trustee of the pension fund due to the redemption of units previously contributed by the participant through these accounts or bonus units issued on them. Details on this will be shared by the pension fund/PFM trustee with the DA.
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The DA must ensure that all issues and redemptions take place at the prevailing net asset value publicly announced by the relevant PFM.
Banks must maintain full reconciliation of the amount transferred/received to/from the pension fund administrator, units paid in/redeemed by the participant against the participant, and ensure compliance with all related exchange regulations.
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