Frequently Asked Questions

The Asset Management Company(AMC) is a Non-Banking Finance Company("NBFC") licensed by the Securities and Exchange Commission of Pakistan ("SECP") to carry out Asset Management in accordance with Part VIII-A of the Companies Ordinance, 1984 (the "Ordinance") and the NBFC & NE Regulations, 2008.

The Securities and Exchange Commission of Pakistan (SECP) is the financial regulatory agency in Pakistan responsible for regulating and supervising the securities market, protecting investors, and ensuring transparency and fairness in the financial system. The SECP was established in 1997 as a statutory body under the Securities and Exchange Commission of Pakistan Act, 1997.

Its functions include registering and regulating securities brokers, investment advisers, and other market intermediaries, enforcing securities laws and regulations, and promoting the development of the securities market in Pakistan. The SECP is also responsible for promoting investor education and awareness and providing a platform for dispute resolution between market participants.

Central Depository Company (CDC) is a securities depository in Pakistan that provides electronic book-entry services for securities such as shares, bonds, and other financial instruments. CDC was established in 1997 and is licensed by the Securities and Exchange Commission of Pakistan (SECP) to operate as a central securities depository (CSD) under the Central Depositories Act, 1997.

CDC provides depository services to investors, including custodial services, securities settlement, and corporate actions processing. By holding securities in electronic form, CDC helps to eliminate the risks and costs associated with physical securities certificates, such as loss, theft, and forgery.

CDC is also responsible for maintaining the National Book Entry System (NBES), which is an electronic book-entry system that provides a centralized platform for the issuance, transfer, and settlement of securities. The NBES is integrated with other market infrastructure, including stock exchanges and clearing houses, to facilitate seamless and efficient securities trading and settlement in Pakistan.

DC pension stands for Defined Contribution pension. It is a type of retirement savings plan where an employee and/or their employer make regular contributions into a pension account or fund, which is then invested in a range of financial assets such as stocks, bonds, and mutual funds.

The contributions are made on a regular basis, typically deducted directly from the employee's salary, and the amount saved grows over time as the investments generate returns. The ultimate value of the pension account will depend on the performance of the investments and the amount of contributions made.

At retirement, the pensioner has the option to withdraw the accumulated funds as a lump sum, purchase an annuity or receive regular income payments from the pension account.

Unlike a Defined Benefit (DB) pension plan, where the retirement income is pre-determined based on factors such as salary, years of service and age, a DC pension plan does not guarantee a specific income at retirement. Instead, the retirement income is dependent on the amount saved and the investment returns earned over the life of the plan.

DC pension plans are becoming increasingly popular because they offer several advantages to both employers and employees.

For employers, DC pension plans are often easier and less expensive to administer compared to traditional defined benefit pension plans. This is because the employer's obligation is limited to making regular contributions to the plan, rather than having to manage and fund the pension plan over the employee's working life.

For employees, DC pension plans offer more control over their retirement savings, as they can monitor the performance of their investments and make adjustments as necessary to help meet their retirement goals. In addition, DC pension plans are portable, meaning that employees can take their pension savings with them if they change jobs.

Overall, DC pension plans provide a flexible and transparent retirement savings option for both employers and employees, and can help ensure that individuals have adequate savings for their retirement years.

There are several benefits of a DC pension plan:

• Portability: DC pension plans are portable, meaning that employees can take their pension savings with them if they change jobs. This makes it easier for employees to manage their retirement savings and ensures that they can continue to save for retirement even if they change employers.
• Investment control: DC pension plans offer employees more control over their retirement savings, as they can choose how their contributions are invested. This allows individuals to tailor their investment strategy to their individual needs and risk tolerance, potentially increasing their chances of achieving their retirement goals.
• Flexibility: DC pension plans offer greater flexibility compared to traditional defined benefit pension plans. Employees can choose how much they want to contribute to their plan and can adjust their contributions as their financial circumstances change.
• Transparency: DC pension plans offer greater transparency compared to traditional defined benefit pension plans. Employees can see how their contributions are being invested and can monitor the performance of their investments over time.
• Employer contributions: Many employers offer matching contributions to their employees' DC pension plans, which can help employees increase their retirement savings without having to contribute as much of their own money.

Overall, DC pension plans offer greater flexibility and control over retirement savings, which can help individuals better manage their retirement planning and achieve their financial goals.

A DC (Defined Contribution) pension plan works by allowing employees and employers to contribute to a retirement savings account. The contributions are invested in a variety of financial assets, such as stocks, bonds, and mutual funds. The investments generate returns over time, which increase the value of the pension account.

The amount of retirement savings an individual has at retirement is determined by the contributions made, the investment returns earned on those contributions, and any fees or charges incurred during the life of the plan.

Here's how a DC pension plan typically works:

• Employee contributions: Employees can contribute a portion of their salary to the DC pension plan, typically deducted directly from their paycheck. The amount they can contribute may be limited by tax regulations.
• Employer contributions: Employers may also contribute to the DC pension plan on behalf of their employees, often as a percentage of the employee's salary.
• Investment options: The contributions are invested in a range of financial assets, such as stocks, bonds, and mutual funds, based on the employee's investment preferences and risk tolerance.
• Account growth: The investments generate returns over time, which increase the value of the pension account. The account value is adjusted for any fees or charges incurred during the life of the plan.
• Retirement income: At retirement, employees can choose to withdraw the accumulated funds as a lump sum, purchase an annuity, or receive regular income payments from the pension account.

Overall, a DC pension plan provides employees with a retirement savings option that is portable, flexible, and transparent, with greater control over their investments and the potential for increased retirement savings.

There are several key differences between a Defined Benefit (DB) pension plan and a Defined Contribution (DC) pension plan:

• Benefit calculation: In a DB pension plan, the retirement benefit is based on a pre-determined formula that takes into account factors such as salary, years of service, and age. In a DC pension plan, the retirement benefit is based on the amount of money contributed to the plan and the investment returns earned on those contributions.
• Investment risk: In a DB pension plan, the employer bears the investment risk, meaning that they are responsible for ensuring that there are sufficient funds to pay for the promised retirement benefits. In a DC pension plan, the investment risk is borne by the employee, as the retirement benefit is based on the investment returns earned on their contributions.
• Portability: DB pension plans are typically tied to a specific employer, meaning that employees cannot take their pension benefits with them if they change jobs. DC pension plans are portable, meaning that employees can take their pension savings with them if they change employers.
• Contribution levels: In a DB pension plan, the employer is typically responsible for making the majority of the contributions to the plan. In a DC pension plan, both the employer and employee can make contributions, with the employee typically having greater control over the contribution amount.
• Benefit guarantees: DB pension plans typically offer a guaranteed retirement benefit to employees, regardless of the performance of the pension plan's investments. DC pension plans do not offer a guaranteed retirement benefit, as the retirement income is dependent on the amount saved and the investment returns earned over the life of the plan.

Overall, the main difference between a DB pension plan and a DC pension plan is the level of risk and responsibility borne by the employer versus the employee. A DB pension plan offers more guarantees to employees, but places greater investment risk on the employer. A DC pension plan offers greater flexibility and control for employees, but places more investment risk and responsibility on the employee.