Non-resident Pakistanis allowed to contribute to pension funds

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 August 05, 2022, the SBP said in order to improve the value proposition of NRP Rupee Value Account (NRVA) and facilitating the non-resident Pakistanis (NRPs), it has been decided to allow NRPs to contribute to pension funds, authorized by the Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension Funds Rules 2005 (VPS Rules), through their Authorized Dealers. Accordingly, the following amendments in Foreign Exchange Regulations have been made:

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Para 8 (iv)(a) of Chapter 8- following new sub-clause has been added:

8. Contribution in units of Pension Fund authorized in terms of VPS Rules, under the management of Pension Fund Managers (PFMs) registered with SECP.

Para 8 (iv)(a) of Chapter 8- existing text has been amended as:

The transfer of funds for the above investments shall be allowed by the ADs through the special instructions received from NRVA holder in this behalf. For investments/ contribution mentioned at (1), (2), (5), (6), (7) & (8) above, the procedure prescribed for investment/ disinvestment/ redemption in Chapter 20 of the Foreign Exchange Manual shall be followed while for investment mentioned at (3) above, the terms and conditions prescribed at Annexure-A, at the end of this chapter, shall be followed.

Para 6 (B) of Chapter 20- following new clause has been added:

(IIIC) Issue of units of Pension Fund authorized by SECP in terms of Voluntary Pension Funds Rules 2005, under management of Pension Fund Managers (PFMs) registered with SECP to undertake pension fund scheme business.

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Para 9 of Chapter 20- following new clause has been added:

(E) Contribution in Units of authorized Pension Funds

NRP Rupee Value Account (NRVA) holders are allowed to contribute in pension funds, authorized in terms of Voluntary Pension Funds Rules 2005, under the management of Pension Fund Managers (PFMs) registered with SECP, through NRVA opened with an Authorized Dealer (AD) in Pakistan. Such contribution can be made in the following manner:

Funds available in NRVA can be used for contribution in pension funds and payment for such contribution may be debited from the account on the specific request of the NRVA holder for onward credit to the bank account of trustee of the pension fund. The Net Asset Value (NAV) allocated with respect to each contribution along with copy of payment instrument/details shall be provided by the PFM to the AD on the same day. PFM shall also send an account statement to the AD within 24 hours of the realization of funds.

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In case of transfer of individual pension account of the NRVA holder from one pension fund to another pension fund of the same PFM, the PFM will share the details of the transfer transaction (including all details as reported for transfer from one pension fund to another fund ) for their record of AD.

In case of transfer of individual pension account of the NRVA holder from one PFM to another PFM, the PFM will share the details of the transfer transaction (including all details as reported for transfer from one PFM to another PFM) for record of AD.

Redemption proceeds may be credited to respective NRVA, received from trustee of pension fund on account of redemption of units previously contributed by participant through these accounts or bonus units issued thereon. The details of the same will be shared by the Trustee of pension fund/ PFM with the AD.

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The AD shall ensure that all issuance and redemptions are taking place at prevailing NAV announced publicly by the relevant PFM.

The banks shall maintain the complete reconciliation of amount transferred/received to/from trustee of pension fund, units contributed/redeemed by the participant there-again, and ensure the compliance of all related foreign exchange regulations.

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