Role of Trustee In ProtectingRole of Trustee In Protecting

The Pension Fund UnderThe Pension Fund Under

The Voluntary Pension System (VPS) The Voluntary Pension System (VPS)

And Other Pension SystemsAnd Other Pension Systems

Role of Trustee In ProtectingRole of Trustee In Protecting

The Pension Fund UnderThe Pension Fund Under

The Voluntary Pension System (VPS) The Voluntary Pension System (VPS)

And Other Pension SystemsAnd Other Pension Systems

Presented by:

Mohammad Hanif Jakhura

Chief Executive Officer

September 5, 2005

The Central Depository Company of Pakistan Limited

Appointment of Trustee according to Appointment of Trustee according to VPS Rules, 2005VPS Rules, 2005

The Pension Fund Manager (PFM) shall appoint a The Pension Fund Manager (PFM) shall appoint a

Trustee for every fundTrustee for every fund

Trustee and PFM must be independentTrustee and PFM must be independent

The Commission may, in the interest of the The Commission may, in the interest of the

participants, capital market and public, give participants, capital market and public, give

directions to the Trusteedirections to the Trustee

A Trustee may retire with the prior approval of A Trustee may retire with the prior approval of

the Commissionthe Commission

Eligibility Criteria of a Trustee underEligibility Criteria of a Trustee underVPS Rules, 2005VPS Rules, 2005

A scheduled bank A scheduled bank Having A+ rating Having A+ rating Been in business for atleast five yearsBeen in business for atleast five years

A trust company - subsidiary of a scheduled A trust company - subsidiary of a scheduled bankbank

A foreign bankA foreign bank Operating as scheduled bank in Pakistan Operating as scheduled bank in Pakistan Providing Trustee services internationallyProviding Trustee services internationally

A central depository company approved by the A central depository company approved by the CommissionCommission

Trustee of VPSTrustee of VPS

VPS Rules, 2005

VPS Rules, 2005

Trust Deed & Offering

Document

Trust Deed & Offering

Document

Income Tax Ordinance,

2001

Income Tax Ordinance,

2001

Companies Ordinance, 1984

Companies Ordinance, 1984

Regulatory / Legal Frame work

Obligations of the Trustee under VPSObligations of the Trustee under VPSRules, 2005Rules, 2005

TakeTake control of all the property of the Fund. The control of all the property of the Fund. The

title of all the Fund’s property shall be vested in title of all the Fund’s property shall be vested in

the Trustee the Trustee [VPS Rule 31 (a)][VPS Rule 31 (a)]

Be liable for any act or omission of any agent Be liable for any act or omission of any agent

appointed by the Trusteeappointed by the Trustee [VPS Rule 31 (b)][VPS Rule 31 (b)]

Ensure that the methods adopted in calculating the Ensure that the methods adopted in calculating the

value of units are in accordance with the value of units are in accordance with the

constitutive documentsconstitutive documents [VPS Rule 31 (e)] [VPS Rule 31 (e)]

Obligations of the Trustee under VPS Obligations of the Trustee under VPS

Rules, 2005 (cont….)Rules, 2005 (cont….)

Ensure that the unit price is calculated and Ensure that the unit price is calculated and

applied in accordance with the provisions of the applied in accordance with the provisions of the

constitutive documentsconstitutive documents

[VPS Rule 31 (d)][VPS Rule 31 (d)]

Carry out the instructions of PFM if they are not Carry out the instructions of PFM if they are not

in conflict with the constitutive documents in conflict with the constitutive documents

[VPS Rule 31 (f)][VPS Rule 31 (f)]

Obligations of the Trustee under VPS Obligations of the Trustee under VPS

Rules, 2005 (cont….)Rules, 2005 (cont….) Ensure compliance with the investment policy Ensure compliance with the investment policy

and borrowing limitations as set out in the and borrowing limitations as set out in the

constitutive documentsconstitutive documents

[VPS Rule 31 (g)][VPS Rule 31 (g)]

Issuance of annual report to participants as to Issuance of annual report to participants as to

whether the PFM has managed the Fund in whether the PFM has managed the Fund in

accordance with the constitutive documentsaccordance with the constitutive documents[VPS Rule 31 (h)][VPS Rule 31 (h)]

Ensure that units are allocated after receiving Ensure that units are allocated after receiving

contributionscontributions

[VPS Rule 31 (i)][VPS Rule 31 (i)]

Protection of Pension Funds through Protection of Pension Funds through TrusteeshipTrusteeship

Based on the Trustee’s report to the Commission, Based on the Trustee’s report to the Commission,

the Commission may cancel / suspend / remove the Commission may cancel / suspend / remove

the registration of PFMthe registration of PFM

PFM shall account to Trustee for any loss caused PFM shall account to Trustee for any loss caused

to the Fund’s assets due to his negligence / to the Fund’s assets due to his negligence /

willful act / omissionwillful act / omission

Trustee’s consent would be required by the PFM Trustee’s consent would be required by the PFM

to appoint auditor for the Fundto appoint auditor for the Fund

KeyKey OperationalOperational ControlsControls of VPS Trusteeof VPS Trustee

Delivery Vs Payment Delivery Vs Payment

Portfolio positionPortfolio position

Fund positionFund position

Daily reporting Daily reporting

Review of Fund’s financial statements Review of Fund’s financial statements

Thank you !Thank you !