Islamic pension fund works in a similar manner as a conventional fund except that the Islamic pension fund only deploys funds in Shariah-Compliant investments. Shariah-compliant investments are those which follow the principles of Islam, i.e. they are free of Riba (interest) and Gharar (speculation).

Key Players in a Islamic Pension Fund

1. Authorized Pension Fund 

   An authorized pension fund is a pension fund authorized by the SECP and managed by a pension fund manager registered with the SECP under the Voluntary Pension System Rules, 2005 ("the VPS Rules"). It is important to understand that only a pension fund manager, registered with SECP, can offer an authorized pension fund.

2. Registered Pension Fund Manager

   An asset management company or a life insurance company, that has been granted a certificate of registration by the SECP under the VPS Rules, is a registered Pension Fund Manager.

3. Trustee

   A trustee in the VPS is the custodian of the assets of the pension fund and acts on behalf of the participants of the pension fund. It can be a bank or a company appointed with the approval of the SECP. The trustee monitors the operations of the pension fund and actions of the pension fund manager and other parties related to the pension fund. All the contributions, investments, returns on investments and other incomes earned by the pension fund are held by the trustee on behalf of the participants.

4. Participants

   All Pakistani nationals holding valid computerized national identity card are eligible to become participants to a pension fund.

5. Shariah Advisor

   The Shariah Advisor prescribes criteria for Shariah compliance of the Fund’s investments. The Shariah Advisor accordingly reviews the investments of the Fund to ensure compliance with such criteria. Accordingly, the Shariah Advisor issues a report that is included in the annual report of the Islamic Pension Fund.