The Securities and Exchange Commission of Pakistan (SECP) has introduced a Passive Equity Sub-Fund under the Voluntary Pension Scheme (VPS), giving pension savers a low-cost way to invest in the stock market. Pension fund managers will offer the sub-fund from January 1, 2027.
Fund managers must offer the new sub-fund alongside the existing Equity, Debt and Money Market Sub-Funds. Savers can choose between actively managed equity funds and passive funds that track a specified market index.
Managers may run the Passive Equity Sub-Fund by tracking a market index directly or by investing in equity Exchange Traded Funds (ETFs) listed on the Pakistan Stock Exchange (PSX). The ETF option offers diversified exposure to the equity market.
The management fee for an ETF-based sub-fund is capped at 0.75 percent per annum. If a manager invests in ETFs run by its own asset management company, no additional management fee will apply, so investors are not charged two layers of fees on the same investment.
SECP Chairman Dr. Kabir Ahmed Sidhu said the sub-fund will give savers greater choice in managing their retirement savings and a cost-efficient route into the stock market. He said the reform will support wider participation in the voluntary pension system and strengthen long-term retirement savings.
