Introduction - Pakistan Society of Actuaries

Report
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
• Recognized universally (including regulatory
agencies) as a professional body representing
the actuarial profession in Pakistan
PSOA Overview
• Managed by a Council which has a 2 year term
and which consists of 7 members
• Current Membership of 142 Including 39
Fellows and 30 Associates
• A significant number of members located
outside Pakistan
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.
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
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
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
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
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
Thank You

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