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Pakistan Society of Actuaries

Pakistan Society of Actuaries. Private Sector Retirement Benefits Seminar 14 May 2013. Introduction to PSOA. Existed since the 1970s Operated as an informal society until 2001 when it was formally incorporated as a S42 company

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Pakistan Society of Actuaries

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  1. Pakistan Society of Actuaries Private Sector Retirement Benefits Seminar 14 May 2013

  2. Introduction to PSOA • Existed since the 1970s • Operated as an informal society until 2001 when it was formally incorporated as a S42 company • Recognized universally (including regulatory agencies) as a professional body representing the actuarial profession in Pakistan

  3. PSOA Overview • Managed by a Council which has a 2 year term and which consists of 7 members • Current Membership of 142Including 39Fellows and 30Associates • A significant number of members located outside Pakistan

  4. Involvement with Regulatory Bodies • Actively liaise with the Securities and Exchange Commission of Pakistan with respect to insurance regulation • A committee of Appointed Actuaries regularly invite a representative of the SECP to attend quarterly meetings • The PSOA has representation on a committee of the Institute of Chartered Accountants of Pakistan which recommends accounting regulations for insurance companies to the SECP • Although actuaries are deeply involved in retirement schemes, the PSOA’s role in this arena has not been as involved, largely due to the lack of a clearly defined regulatory structure.

  5. PSOA Achievements • Apart from its involvement with insurance regulation the PSOA has also • Developed some guidance related to the valuation of retirement schemes • Developed guidance for appointed actuaries for reporting to the management of life insurance companies • Early this year the PSOA also published, with the help of State Life’s actuarial division, a new mortality table based on the mortality experience of the State Life Insurance Corporation between 2001 and 2005 • This replaces the EFU 61-66 table • Although meant for insured lives it is obvious that this may be used for the valuation of retirement benefit schemes with appropriate adjustments for mortality improvement

  6. Regulation of Retirement Schemes • The responsibility for regulation of retirement benefit schemes in Pakistan is not clearly defined. The only areas where there are clearly defined responsibilities are • the EOBI. However this provides only a very minimal pension leaving employers to provide the major part directly. • The VPS for which the SECP has regulatory responsibility • There is, however, a clear need for regulation with the main objective of ensuring protection of the interests of the retirement benefits of employees • India has separate regulators for Provident Funds and Pensions • Pension Fund Regulatory and Development Authority (set up in 2003) • Employees Provident Fund Organization

  7. Need for Action • There is certainly a need to act as sectors do not develop unless there is a clearly defined regulatory structure • Attempts to initiate regulatory initiatives relating to retirement schemes have been made earlier • The SECP attempted, in the early 2000s, to initiate a Chile style mandatory defined contribution model • In 2005 the SECP held a two day seminar in Lahore with a promise to follow up – this did not happen • The SECP initiated and introduced the Voluntary Pension Scheme regulation - we have a session later this morning to gauge the extent of its success and judge what the future holds for it • However nothing material has come about – perhaps due to lack of an owner

  8. Objective of Seminar • The objective of this seminar is largely to act as a catalyst to stimulate thought on how retirement schemes need to develop • This is especially required when there is a world wide trend to move away from defined benefit schemes to defined contributions schemes • The PSOA did conduct a similar seminar in 2003 but has not since been as active on this front as it should have been

  9. Need to Define Regulatory Responsibility • The success of initiatives is closely tied in with the effort made by stakeholders – a clear owner often being required for this • It is suggested that in the current regulatory environment the SECP is a natural owner – given that the vast bulk of private sector schemes are administered by corporate entities falling within the scope of its regulations • I hope that this aspect will be taken up by speakers and the audience as the day proceeds

  10. Thank You

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