Peshawar, The government of Khyber Pakhtunkhwa (KPK) has successfully transitioned from the traditional defined-benefit pensions to a new, futuristic Voluntary Pension System (VPS) for its civil servants. This landmark shift, affecting employees who joined the provincial government service on or after June 7, 2022, is expected to enroll approximately 33,000 civil servants.

According to Securities and Exchange Commission of Pakistan (SECP), the transition was celebrated with a conference in Peshawar, titled “KPK Pension Reforms: Leading the Way Forward,” jointly organized by SECP and the Mutual Funds Association of Pakistan (MUFAP). SECP Chairman Akif Saeed lauded the initiative as a crucial step towards managing the fiscal challenges posed by the growing public pension bill. He stressed the importance of extending the VPS framework to cover all departments of the federal and provincial governments. The system, Saeed noted, not only offers a viable alternative to the traditional pension regime but also helps in reducing government expenditures.

Secretary Finance KPK, Mr. Amer Sultan Tareen, in his keynote address, highlighted the steep rise in provincial pension expenses, which escalated from 878 million in FY 2003-04 to 132 billion in FY 2023-24, representing a growth from less than 1% to over 12% of the total consolidated budget. This surge necessitated the introduction of a funded, professionally managed contributory pension framework for the sustainability of the provincial government.

SECP Commissioner, SCD, Mujtaba Ahmed Lodhi emphasized the need for pension fund managers and trustees to adapt and modernize to meet future demands. CEO MUFAP, Mashmooma Z. Majeed, detailed the investor journey from joining the pension scheme to retirement and post-retirement benefits. The KPK Government has onboarded twelve Pension Fund Managers for this initiative, including notable firms like ABL Asset Management Company Limited, Al Habib Asset Management Limited, and others, to manage the pension funds.