Overseas Pakistanis bet high on pension scheme

Central bank initiative will serve nine million Pakistani diaspora and has potential to attract fresh investment worth millions of dollars that will benefit the national economy



More than six million overseas Pakistanis now have Nicop and machine-readable passports and they remit on an average $30 billion remittances annually to the country. — File photo
More than six million overseas Pakistanis now have Nicop and machine-readable passports and they remit on an average $30 billion remittances annually to the country. — File photo
by

Muzaffar Rizvi

Published: Fri 19 Aug 2022, 5:46 PM

Last updated: Fri 19 Aug 2022, 10:43 PM

Overseas Pakistanis sees good opportunities in latest pension scheme initiative announced by the central bank and said it would create another window for the country to attract foreign exchange from nine million Pakistani diaspora worldwide.

Analysts, bankers and experts also termed the move beneficial for the struggling economy and said it would be a valuable new addition to the Roshan Digital Account (RDA) portfolio. However, they said more details are awaited from the State Bank of Pakistan, the central bank.

“The pension scheme will have a potential to attract investment worth millions of dollars into different saving plans as well as in development projects of the country. It may contribute a significant share to RDA as every non-resident Pakistani will love to be part of it to secure future of their children as well as have a peace of mind after the retirement of service,” they said.

Remittances, RDA to rise

As per latest available data, more than 8.2 million Pakistanis abroad, who hold the National Identity Card for Overseas Pakistanis (Nicop), have registered with the National Database and Registration Authority of Pakistan (Nadra). More than six million overseas Pakistanis now have Nicop and machine-readable passports and they remit on an average $30 billion remittances annually to the country,” according to a Nadra official.

The central bank’s latest data indicates that inflow of remittances under RDA rose to $4.794 billion by the end of July 2022 as compared to $4.606 billion till end of June as expatriate Pakistanis from 175 countries had deposited the funds to 441,344 accounts opened through RDA.

“RDA is a huge success and some 11,980 new accounts were opened in July,” according to SBP.

Pakistan received $31.2 billion in remittances from overseas in financial year 2021-22, reflecting a 6.1 per cent increase from $29.4 billion in the previous fiscal year year.

Zafar Masud, president and chief executive of the Bank of Punjab, said the Roshan Pension Plan is designed to enable overseas Pakistanis to capitalise on financial planning for their retirement.
Zafar Masud, president and chief executive of the Bank of Punjab, said the Roshan Pension Plan is designed to enable overseas Pakistanis to capitalise on financial planning for their retirement.

Capitalise on retirement plan

As one of the participating banks, the Bank of Punjab (BoP) welcomes the launch of Roshan Pension Plan (RPP) and said it would serve nine million Pakistani diaspora worldwide.

Zafar Masud, president and chief executive of the Bank of Punjab, said the Roshan Pension Plan is designed to enable overseas Pakistanis to capitalise on financial planning for their retirement.

"The RPP will be a collaborative proposition, managed by RDA participating banks and Asset Management Companies,” Masud said.

In terms of benefitting Pakistan’s economy, and attracting more foreign exchange, he said the RPP proposition is well-considered.

"It is a new asset class that has been made available for overseas Pakistanis to further diversify their investment portfolios. RPP, like most other voluntary pension funds, is targeted at long-term investors, and entails similar tax credits," he said.

Samiullah Tariq, head of research at Pakistan Kuwait Investment, termed the initiative a step in the right direction.
Samiullah Tariq, head of research at Pakistan Kuwait Investment, termed the initiative a step in the right direction.

A step in the right direction

Samiullah Tariq, head of research at Pakistan Kuwait Investment, termed the initiative a step in the right direction and said the government can use the funds to be generated through the pension scheme for investment in long-term projects.

“The pension scheme would also provide a saving avenue to overseas Pakistanis as some of the expatriates may intend to return to the country while others might use it as a retirement fund,” Tariq told Khaleej Times.

Fahad Zubeiri, a Dubai-based expatriate who work in a financial institution, said pension scheme for overseas Pakistanis was long time over due and it will definitely benefit the community as well as local economy by attracting more funds from the non-resident Pakistanis.

“RPP will be win-win situation for everyone as it will help overseas Pakistanis to save for retirement while on the other hand it will help attract more foreign exchange to different schemes of Pakistani banks and other institutions,” he said.

Diversify investment options

Masud of the Bank of Punjab said RPP will diversify investment options available under Roshan Digital Account.

"By virtue of the RPP being a new asset class, its introduction will lead to new (and higher) investments in RDA. Currently, the dominant proportion of RDA inflows are directed towards Naya Pakistan Certificates (NPCs). The launch of RPP is likely to enhance inflows by offering an entirely new avenue for investment," the BOP president said.

Additionally, he said there are numerous other ways in which the new RPP proposition will likely benefit the Pakistani economy, including but not limited to, the deepening of the Pakistani stock market.

"A strong and robust market has resoundingly positive effects for the economy; it is positive for companies seeking to expand – as it enables business entities to raise capital for expansion more effectively and expeditiously. However, the attractiveness of the RPP for overseas investors can be enhanced further by adding other feature-sets that are relevant to the needs of non-resident Pakistanis. This can perhaps be achieved by offerings such as fee waivers (on Passports, ID Cards, and NICOPs), VIP passes for investors enabling access to embassies, as well as the allowance to borrow money against the investments in one’s pension fund. The latter point is pertinent as pension funds are long-term investment instruments with limited repatriability, and the ability to take loans against investments in pension funds addresses both of those concerns," he said.

A valuable addition to RDA

Masud said the new RPP is poised to be a valuable new addition to the Roshan Digital Account Portfolio.

"It is an extension of the State Bank’s unyielding efforts to facilitate overseas Pakistanis, by pairing willing non-resident Pakistani investors with the right investment avenues at the right time. The Roshan Pension Plan will enhance inflows by offering an entirely new asset class for investment. It will also help deepen the Pakistani Stock Market, and will be positive for the economy by increasing the ease with which companies seeking to expand can secure the required capital," he said.

— muzaffarrizvi@khaleejtimes.com


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