What is Pension Fund / Islamic Pension Fund?
Pension fund is a Voluntary Pension Scheme (VPS). Several investors invest in a retirement scheme/pool of investment managed by HBL Asset Management Limited. Investments of these pension schemes are further invested in different asset classes depending on the sub-fund. Islamic Pension Fund is a Shariah-compliant Voluntary Pension Scheme (VPS). Several investors invest in a retirement scheme/pool of investment managed by HBL Asset Management Limited. Investments of Islamic Pension Scheme are further invested in Shariah-compliant asset classes depending on the sub-fund.
What is the objective of HBL Pension Funds?
To provide a secure source of savings and regular income to participants after retirement.
Who can invest in Pension Funds?
Following are eligible to join pension funds: A. Pakistani Nationals or Non-resident Pakistanis holding a NTN or CNIC or NICOP. B. A member of approved provident fund can transfer his/her balance to pension fund. C. Employers can contribute on behalf of their employees.
What are the benefits of Pension Funds?
A. Option of investing money in different allocation schemes, depending on the risk appetite/tolerance of the participant.
B. Tax Credit: Participants are entitled to tax credit (20% of taxable income and up to 50% of previous year taxable income) on their contribution.
C. Tax-free Growth in Investment: Contributions made by participants and/or their employers (if any), plus investment income, are accumulated tax- free in the sub-funds until the participant retires.
D.Option to withdraw lump sum amount (50% of accumulated value) free of tax at retirement: Participants can choose to receive a lump sum payment (up to 50% of their accumulated balance) when they retire, free of tax.
E. Pension Fund Continuity: Pension funds continue even after change of employer, unlike provident and gratuity funds.
F. Pension Fund Portability: Participants of VPSs can change their Pension Fund Manager or pension fund, once a year by giving 21 days prior notice. However, participants can choose to change their selected allocation scheme, twice a year.
G. Professional Management: Your investment is managed by fund managers who have a high level of educational and professional credentials and appropriate investment managerial experience.
Can a participants have more than one Pension Account?
What is the objective of Money Market Sub-Fund of HBL Pension Funds?
The investment objective of Money Market Sub-Fund is to earn returns from investments in money markets of Pakistan, thus incurring a relatively lower risk than debt investments.
Who is the Trustee / Custodian of HBL Pension Funds?
CDC is the trustee and custodian of HBL Pension Funds.
How often can an investor change his/her allocation scheme?
An investor can change from one allocation scheme to another allocation scheme twice in a Financial Year.
What date can a participant select as his/her retirement age?
How much Tax Credit can I claim by investing in a Pension Fund?
As per Section 63 of the Income Tax Ordinance, the investment amount eligible for tax credit is 20% of annual taxable income or actual investment, whichever is lower
Can a participant invest in both Mutual Funds and Pension Funds at the same time?
One can concurrently invest in mutual funds and VPSs and avail tax credit facility under both forms of investments in the same year.
How can participants claim tax credit?
Salaried participants can claim tax credit by simply providing account statement issued by the Pension Fund Manager to their Human Resource Department with the request to reduce the tax liability accordingly. Self-employed individuals can reduce their annual tax liability at the time of filing their annual income tax returns by the amount of eligible investment in their VPS.
Can participants continue to claim investment allowance each year on the amount invested?
No, participants can only avail tax credit for the tax year on investment made in that particular year in VPS.
Is the contribution made by employers a tax admissible expense?
Yes, contributions made by employers on behalf of employees in HBL Pension Fund and Islamic Pension Fund are a tax deductible expense as defined under Clause 3(c) of the Definitions of the Income Tax Ordinance, 2001.
Can participants change their Pension Fund Manager and how frequently?
Yes, participants can change their Pension Fund Manager once in a Financial Year by giving a notice of 21 days.
Do Pension Funds offer dividends? (Cash/Bonus Units). Can these dividends be withdrawn by participants?
Income earned by participants is accumulated in their accounts and can be withdrawn any time. (Subject to the provisions of Income Tax Ordinance 2001).
Is there any fee on transfer of accumulated balance from one Pension Fund Manager to another Pension Fund Manager?
No fee/front-end fee shall be charged on such transfers.
What happens in case of death of a participant?
In the unfortunate event of death of a participant, the nominees as mentioned in the Nomination Form, shall be entitled to the balance held in Individual Pension Account of the deceased participant.
What are the governing laws pertaining to Pensions Funds?
Following are the governing laws pertaining to Pensions Funds:
- Voluntary Pension System Rules, 2005
- Income Tax Ordinance, 2001
