| FAQs - Atlas Pensions |
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| Section 1 - Pension Funds / Plans in General |
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Pension fund is a pool of assets forming a separate legal entity that is created with a sum of money set aside at regular intervals over the working life of a Participant and invested for capital growth and to provide a regular income after retirement to maintain a reasonable standard of living. |
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Pension plans can be divided into two broad types:
Defined Benefit Plans:
These are employer-sponsored retirement plans, provided to employees who have served the employer for a minimum number of qualifying years. The pension amount is determined based on factors such as last drawn salary, and duration of employment. It is the responsibility or discretion of the employer to create the fund to meet the pension liability and to invest it.
Defined Contribution Plans: A retirement plan where the final benefit is determined according to the amount contributed in the pension/ retirement fund over time by the employee and / or employer (if any); the income derived from the investment; and appreciation in the value of underlying securities. |
| Section 2 - Atlas Pensions |
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The title ‘Atlas Pensions’ represents two pension funds i.e. Atlas Pension Fund (APF) and Atlas Pension Islamic Fund (APIF), established under the Voluntary Pensions Systems Rules 2005 by Atlas Asset Management Limited (AAML). These pension funds are personalized savings plus investment vehicles for retirement.
Both these funds have an umbrella structure comprising of three Sub-Funds each in the form of unit trust schemes in which contributions received from Participants are allocated according to their risk/ return preferences (as reflected in the Allocation Scheme selected by the Participant). The Sub-Funds of APIF invest only in Shariah Compliant Investments approved by the Shariah Advisor.
These funds allow Participants to save for retirement by providing a suitable investment option. The Participants are free to choose as to when to start saving, how much to save and how to invest these savings in Atlas Pensions. A Participant can also select his/her retirement age which can be any age between age sixty and seventy years. The Participant on retirement can withdraw up to twenty-five per cent from the accumulated balance in his Individual Pension Account, free of tax. The remaining amount will either be used to purchase an Approved Annuity Plan from a Life Insurance Company or purchase an Approved Income Payment Plan offered by a Pension Fund Manager, to withdraw regular monthly installments.
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Following are eligible to join Atlas Pensions:
- Pakistani Nationals who hold a valid National Tax Number or Computerized National Identity Card.
- Non-resident Pakistanis holding a National Tax Number or Computerized National Identity Card or National Identity Card Number for Over-seas Pakistanis (NICOP).
- Employers can contribute on behalf of their employees.
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Following are the governing laws pertaining to Atlas Pensions:
- Voluntary Pension System Rules, 2005
- Income Tax Ordinance, 2001
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Following are advantages to the Participants in case they join Atlas Pensions:
- Choice of investing money as per investment horizon and risk appetite through choosing one of the available Allocation Schemes
Participants get the choice to allocate their contributions between equities, debt and money market instruments in accordance with their investment horizon and risk appetite as reflected in the chosen Allocation Scheme. Hence, the Participant shall be selecting any of the allocation schemes offered by AAML. Through the allocation schemes, the risk of each Participant shall be managed accordingly.
- Tax Credit
Participants will be entitled to tax credit on their contributions. Please refer to FAQ 1 (Taxation).
- Growing investment
The Contributions paid by the Participants and/ or their employers (if any), plus the investment income, are accumulated tax free in the Sub-Funds until the Participant retires.
- Planned retirement
Participant can choose his/her retirement age that can be any age between sixty to seventy years.
- Option of tax free lump sum at retirement
A Participant can choose to receive a lump sum payment (up to 50% of his/her accumulated balance) when he/she retires, free of tax. Any withdrawal in addition to 50% shall be subject to tax under section 156B(1)(b) of Income Tax Ordinance 2001.
- Early retirement due to disability
Incase the Participant retires early due to any disability that renders him/her unable to continue work, a pension can be paid immediately from the accumulated balance in his/her pension account, subject to approved medical evidence.
- Job Portability / Mobility
Atlas Pensions are portable. This means that the account stays with the Participants even if they change jobs and they can continue to contribute on their own or through their new employer into their respective Individual Pension Accounts.
- Professional management of funds
Atlas pensions are managed by professional fund managers of AAML who have the market knowledge and experience to manage such funds. AAML has a technical collaboration with ING, which is one of the leading companies in this field in the world and has experience of managing over Euro 400 billion in pension assets in thirty countries.
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- Self sufficiency even after retirement
Saving for retirement will help Participants to be self sufficient and maintain their standard of living even after they retire as they shall be getting a regular income after retirement, in addition to 50% of accumulated balance lump sum payment at the age of retirement.
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Atlas Pensions consists of APF and APIF and each of these pension funds comprises the following three Sub-Funds:
- Equity Sub-Fund
The objective of Equity Sub-Fund is to achieve long term capital growth. The Equity Sub-Fund shall invest at least 90% of its net assets in equity securities.
- Debt Sub-Fund
The objective of the Debt Sub-Fund is to provide income along with capital preservation. The Debt Sub-Fund shall invest primarily in tradable debt securities with the weighted average duration of the investment portfolio of the Sub-Fund not exceeding five years.
- Money Markey Sub-Fund
The objective of the Money Market Sub-Fund is to provide regular income along with capital preservation. The Money Market Sub-Fund shall invest primarily in short term debt securities with the duration not exceeding one year.
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The Pension Fund Manager shall open and maintain an Individual Pension Account in the name of each Participant on receipt of the Participant’s registration form along with the first contribution. Each Individual Pension Account shall be assigned a unique identity number that must be used for any further correspondence. All contributions made by the Participant shall immediately be credited to his/her Individual Pension Account and be used to purchase the Units of the Sub-Funds according to the Allocation Scheme selected by the Participant. |
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The selection of Allocation Scheme would allow a Participant to adopt a focused investment strategy, according to his/her risk/return requirements, in a combination of two or more of the above Sub-Funds. The risk-return profile of each Allocation Scheme shall be dependent on the percentage allocation of that Allocation Scheme in the Sub-Fund.
There are following six different Allocation Schemes available:
- High Volatility Allocation Scheme
High Volatility Allocation Scheme invests primarily in the Equity Sub-Fund with a small allocation in the Debt Sub-Fund, seeking long-term growth of capital. Investors with long investment time horizon and/or high tolerance for risk may prefer this option. High Volatility Allocation Scheme shall be allocated between the Sub-Funds as follows:
Equity Sub-Fund |
Debt Sub-Fund |
Money Market Sub-Fund |
(min.)
65% |
(min.)
20% |
(min.)
Nil |
- Medium Volatility Allocation Scheme
Medium Volatility Allocation Scheme offers a balance between equity and fixed income instruments through investments in Equity Sub-Fund, Debt Sub-Fund with a small allocation in the Money Market Sub-Fund seeking total return both in the form of income and capital appreciation. Investors with long to medium investment time horizon and/or moderate tolerance for risk may prefer this option. Medium Volatility Allocation Scheme shall be allocated between the Sub-Funds as follows:
Equity Sub-Fund |
Debt Sub-Fund |
Money Market Sub-Fund |
(min.)
35% |
(min.)
40% |
(min.)
10% |
- Low Volatility Allocation Scheme
Low Volatility Allocation Scheme offers a conservative mix between equity and fixed income instruments investing primarily in Debt Sub-Fund and Money Market Sub-Fund with a small allocation in the Equity Sub-Fund seeking total return with more focus on capital preservation. Investors with medium to short investment time horizon and/or lower tolerance for risk may prefer this option. Low Volatility Allocation Scheme shall be allocated between the Sub-Funds as follows:
Equity Sub-Fund |
Debt Sub-Fund |
Money Market Sub-Fund |
- Lower Volatility Allocation Scheme
Lower Volatility Allocation Scheme invests solely in fixed income instruments with no allocation in equity securities, by offering a mix between Debt Sub-Fund and Money Market Sub-Fund seeking regular income along with capital preservation. Investors with short investment time horizon and/or very low tolerance for risk may prefer this option. Lower Volatility Allocation Scheme shall be allocated between the Sub-Funds as follows:
Equity Sub-Fund |
Debt Sub-Fund |
Money Market Sub-Fund |
(min.)
Nil |
(min.)
40% |
(min.)
40% |
- Life Cycle Allocation Scheme
Lifecycle Allocation Scheme allocates between the equity and fixed income instruments through investments in Equity Sub-Fund, Debt Sub-Fund and Money Market Sub-Funds by varying allocation between the Sub-Funds in accordance with the age of the Participants and their respective risk tolerance capability as assessed by the risk assessment form, moving from a higher percentage in the equities in a younger years to a lower percentage in equities during the older years to reduce the risk near retirement age, seeking capital growth during the early years and capital preservation towards later years in the Participant’s life cycle. Participants want a systematic approach to allocating their Contributions may prefer this option. Lifecycle Allocation Scheme shall be allocated between the Sub-Funds as follows:
- Lifecycle Allocation scheme for Participants with high tolerance for risk.
Allocation Scheme |
Equity Sub-Fund |
Debt Sub-Fund |
Money Market Sub-Fund |
Age of Participant |
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18 – 30 (Yrs) |
80% |
20% |
Nil |
31 – 40 (Yrs)
41 – 50 (Yrs)
51 – 60 (Yrs)
61 and above (Yrs) |
70%
50%
25%
15% |
30%
40%
45%
50% |
Nil
10%
30%
45% |
- Lifecycle Allocation scheme for Participants with moderate tolerance for risk.
Allocation Scheme |
Equity Sub-Fund |
Debt Sub-Fund |
Money Market Sub-Fund |
Age of Participant |
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18 – 30 (Yrs) |
70% |
30% |
Nil |
31 – 40 (Yrs)
41 – 50 (Yrs)
51 – 60 (Yrs)
61 and above (Yrs) |
60%
40%
20%
5% |
40%
50%
50%
45% |
Nil
10%
30%
50% |
- Lifecycle Allocation scheme for Participants with low tolerance for risk.
Allocation Scheme |
Equity Sub-Fund |
Debt Sub-Fund |
Money Market Sub-Fund |
Age of Participant |
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18 – 30 (Yrs) |
60% |
34% |
Nil |
31 – 40 (Yrs)
41 – 50 (Yrs)
51 – 60 (Yrs)
61 and above (Yrs) |
50%
30%
10%
Nil |
50%
60%
55%
40% |
Nil
10%
35%
60% |
- Customized Allocation Scheme
Customized Allocation Scheme offers a personalized investment between the equity and fixed income instruments through investments in Equity Sub-Fund, Debt Sub-Fund and Money Market Sub-Fund, varying allocations between the Sub-Funds as selected keeping in consideration Participant’s risk/return profile i.e. their ability and willingness to take risk, as determined by the risk assessment form.
APF - Equity Sub-Fund |
APF – Debt Sub-Fund |
APF - Money Market Sub-Fund |
Total (between three Sub-Funds) |
0-80% |
20-75% |
0-60% |
100% |
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In the event of no choice by the Participant, the Pension Fund Manager will have the right to allocate the Contribution with the Low Volatility Allocation Scheme or the Lower Volatility Allocation Scheme, as it may deem fit. |
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A participant can change from one Allocation Scheme to another Allocation Scheme once a year. |
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Before deciding which Allocation Scheme to select to invest in, the Participants should consider the types of funds and level of risk involved. To help them choose an investment mix to suit their specific needs, the Allocation Schemes have been graded into risk bands – lower risk, lower to medium risk, medium to higher risk and higher risk.
Furthermore, for pension investment, it is important to take into account the perceived risk that suits each stage in the working life. Different risk profiles may be appropriate at different stages of the Participant’s working life.
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Expected Risk Profile |
Expected Return Profile |
High Volatility Allocation Scheme
Medium Volatility Allocation Scheme
Low Volatility Allocation Scheme
Lower Volatility Allocation Scheme
Lifecycle Allocation Scheme
Customized Allocation Scheme |
Higher Risk
Medium to High Risk
Lower to Medium Risk
Lower Risk
Higher in early years and lower in later years
Dependent on the percentage selected within the given range. |
Higher Return
Medium to High Return
Lower to Medium Return
Lower Return
Higher in early years and lower in later years
Dependent on the percentage selected within the given range |
Participant should also consider that the effect of inflation would reduce the buying power in the future of his/her pension. If investment returns are sufficiently low, inflation could cancel the returns that the Individual makes on his/her pension investment.
The risk is particularly relevant to lower risk funds that invest in fixed interest and cash, because they have no protection against inflation, as provided by equity investments.
AAML can help you determine the asset allocation, which is suitable for you. Please telephone us and our representative will call on you.
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A six monthly Account Statement for the half years ending December 31 and June 30 shall be sent to the Participants in the month immediately succeeding these periods. It shall be a personalized statement for the Participants, having the following minimum information:
- The number of Units allocated
- Current valuation of the Units in the Individual Pension Account as of that date
- Participant’s aggregated transactions for that six month period including the types of Contributions received; and
- Details of benefit disbursements: retirement along with the taxes withheld, if any or other withdrawals if any.
It is important that the Participant updates the Pension Fund Manager about any change in address or other particulars on timely basis. In addition to six months account statement, every participant shall also receive an account statement on every contribution, within a week of receipt. It shall also serve as receipt of contribution. However, incase of contribution received through employers, an acknowledgement receipt is sent to the employer in line with Rule 13 (3) of Voluntary Pension System Rules 2005.
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Participant may choose his/her age of retirement between sixty and seventy years, depending on his/ her own personal circumstances. |
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In the unfortunate event of any such disability that renders a Participant unable to work and on production of medical report from a medical board that is approved by the Securities & Exchange Commission of Pakistan, it will be deemed that the Participant has reached the retirement age and all the conditions pertaining to retirement shall apply. |
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At retirement, a Participant can choose to do any of the following:
- Withdraw the total balance, subject to tax under Income Tax Ordinance, 2001
Withdraw up to fifty per cent (50%) of the accumulated amount in his/her Individual Pension Account tax free and use the remaining amount to;
- Purchase on Approved Annuity Plan from a Life Insurance Company of his/her choice; or
- Enter into the Income Payment Plan to withdraw from the remaining amount in monthly installments till the age of seventy five years or earlier, after which the remaining amount can be used to purchase on annuity from a Life Insurance Company of his/her choice.
Note: The amount received under a) & b) will be subject to income tax.
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- Participant must submit the Retirement Options Form to Atlas Asset Management Limited (AAML) at least thirty days before the chosen date of retirement. This form shall contain the selected date of retirement and the selected benefits options. In the event that the Participant is planning to withdraw more than allowable amount as lump sum, he/she must also provide his/her tax details for the last three years as in this event tax will be deducted on the amount which exceeds the tax free withdrawal limit.
- On the date of retirement as selected by the Participant all the Units of the Sub-Fund in his/ her Individual Pension Account shall be redeemed. The redemption shall be at the Net Asset Value at the retirement date (if that day is a Dealing Day otherwise on the next Dealing Day). The amount due shall be credited to his/her Individual Pension Account, which shall earn the applicable market rate of interest for deposits of similar size and duration.
- 3. The cheque for the lump sum amount (50% of the accumulated balance) shall be mailed to the Individual/ his bankers, (if so instructed) within six business days provided that all the details relating to the Participant are complete. The remaining amount shall be either invested in the Approved Income Payment Plan offered by AAML or any other pension fund manager or sent to the life insurance company to purchase an Approved Annuity of Participant’s choice.
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| Section 4 - Withdrawal before Retirement |
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Participant may, at any time before attaining the retirement age, redeem all or part of the Units in his/her Individual Pension Account. However, such redemptions will be subject to deduction of Income tax at his/her average tax rate for the last three consecutive years. Click Here. |
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- Participant must submit the Early Redemption Form to Atlas Asset Management Limited (AAML) for an early withdrawal to take place. This should be accompanied by documentary evidence for the taxable income and tax paid by the Participant for the last three years to enable the AAML to determine the average tax rate which is required to be deducted.
- The Units in the Sub-Funds shall be redeemed at the Net Asset Value at the close of the Dealing Day on which the request, complete in all respects, is received. The amount due shall be credited to the Individual Pension Account, from which the redemption payment shall be made after deducting the applicable tax, as required.
The withdrawals may be through single or multiple payments. Incase of partial withdrawals, Sub-Fund Units shall be redeemed on pro rata basis ensuring that he remaining Units are in accordance with the Allocation Scheme last selected by the Participant.
- The redemption amount shall be paid by direct transfer to the Participant’s designated bank account or a crossed cheque / draft for the amount will be dispatched to the registered address of the Participant.
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| Section 5 - Death |
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| Q1) What happens incase of death of a Participant? |
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In the unfortunate event of the death of a Participant , the nominees (as identified by the Nomination Form) shall be the only persons recognized as having any title to or interest in the balance held in Individual Pension Account of the deceased. In case no nominations have been made, the executors, administrators or succession certificate holders of the deceased Participant shall be the only persons recognized as having title to the accumulated balance of Individual Pension Account of the deceased Participant.
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| Q2) What are the options available to the Participant’s nominees in case of death of Participant? |
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Following are the options available to the nominees:
- Withdraw his/her share of the amount subject to the conditions laid down in the Income Tax Ordinance; 2001 (XLIX of 2001);
- Transfer his/her share of the amount into his existing or new Individual Pension Account to be opened with the pension fund manager, according to the Voluntary Pension System (VPS) Rules;
- Use his/her share of the amount to purchase an Approved Annuity Plan on his/her life from a Life Insurance Company, only if the age of the survivor is fifty five years or more; or
- Use his/her share of the amount to purchase a deferred Approved Annuity Plan on his life from a Life Insurance Company to commence at age fifty five years or later.
If any amount in excess of the allowable amount is withdrawn as cash by the nominees, then tax will be deducted before making any such payments. |
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| Q3) What is the procedure for redemption of Units in the event of death of the Participant? |
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- The Units shall be redeemed on the Dealing Day on which the intimation of death of the Participant is received in writing and transferred to the Individual Pension Account of the deceased.
- Each of the nominees as nominated in the Nomination Form shall be required to submit Early Redemption Form to Atlas Asset Management Limited (AAML). The total amount in the Individual Pension Account of the deceased participant shall be divided among the nominated survivor(s) according to the percentages specified in the Nominations Form.
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| Section 6 - Insurance |
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| Q1) Is there any insurance coverage extended to Participants? |
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Insurance Coverage to the Participants of Atlas Pension Fund (APF):
Atlas Asset Management Limited (AAML) as the Pension Fund Manager provides free 24 hours a day world wide accidental death and disability coverage through New Jubilee Life Insurance Company Limited to all the Participants of Atlas Pension Fund (APF) up to the age of 60 years. This insurance coverage shall only be available for as long as the Participant contributes to APF. The Participant shall not be required to undergo medical examination for insurance coverage laid in the policy.
Takaful Coverage to the Participants of Atlas Pension Islamic Fund (APIF):
Atlas Asset Management Limited (AAML) as the Pension Fund Manager provides free accidental death, terminal illness benefits and all the other supplementary benefits through the takaful products and services of Pak-Qatar Family Takaful Limited (PQFTL) to all the Participants of Atlas Pension Islamic Fund (APIF) up to the age of 60 years. This insurance coverage shall only be available for as long as the Participant contributes to APIF. |
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| Q2) What is the sum assured offered to the Participants? |
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The actual sum assured offered to the Participants shall be up to 100 times the monthly contribution to the APF subject to a maximum of Rs. 4,000,000 in the event of death and full disability and range between 1 to 90 times the monthly contributions in the event of partial disability, subject to the maximum of Rs. 4,000,000. |
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| Q3) Is there any other insurance coverage available? |
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Yes. Atlas Asset Management Limited also offers the following three optional insurance coverage schemes, which will be available world wide 24 hours a day, in collaboration with New Jubilee Life Insurance Company Limited to all Participants who have opted for APF up to the age of 60 years at an affordable price. The policies will be available on yearly basis.
- Life Insurance
- Critical Illness
- Accidental Hospitalization
The Participant shall not be required to undergo medical examination for insurance coverage laid in the policy.
Note:
For premium rates, terms and conditions and other details, please refer to the Insurance Coverage Leaflet which will be available on request.
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| Section 7 - Taxation |
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| Q1) What is the tax credit allowed on contributions made in Atlas Pensions? |
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Contributions made by a Participant in Atlas Pension fund (APF) and Atlas Pension Islamic Fund (APIF) in any one tax year, shall be entitled to a tax credit under Section 63 of the Income Tax ordinance 2001.
The amount of tax credit in any one tax year shall be calculated according to the following formula:
(A/B) x C
Where:
- Is the amount of tax assessed to the person for the tax year, before allowance of any tax credit under this part;
- Is the person’s taxable income for the tax year;
- Is the lesser of:
- the total contribution or premium paid by the person in the year; or
- Twenty percent of the eligible person’s taxable income for the relevant tax year; provided that an eligible person joining the scheme at the age of forty one years or above, during the first ten years starting from July 01, 2006 shall be allowed additional contribution of 2% p.a. for each year of age exceeding forty years. Provided further that the total contributions allowed to such persons shall not exceed 50% of the total taxable income of the preceding year; or
- Five hundred thousand rupees
- Tax credit illustration for salaried class Participants
During any one tax year |
Scenario
I |
Scenario
II |
Scenario
III |
Scenario
IV |
Gross Taxable Income from Salary |
600,000 |
600,000 |
4,000,000 |
4,000,000 |
Amount contributed in Atlas Pension Fund |
@ 12.5% |
@ 20% |
@ 12.5% |
@ 20% |
75,000 |
120,000 |
500,000 |
800,000 |
Maximum ceiling of Contribution for tax credit purposes |
Contribution Amount |
@ 20% |
Max. Amount |
Max. Amount |
75,000 |
120,000 |
500,000 |
500,000 |
Tax Payable* for the Year before Tax Credit under Section 63 |
@ 4.5% |
@ 4.5% |
@ 18.5% |
@ 18.5% |
27,000 |
27,000 |
740,000 |
740,000 |
Tax Credit on Contributions |
3,375 |
5,400 |
92,500 |
92,500 |
Net Tax Payable for the Year |
23,625 |
21,600 |
647,500 |
647,500 |
* The tax rate shall apply as per the respective tax slab of each Participant |
- Tax credit illustration for self employed Participants
During any one tax year |
Scenario
I |
Scenario
II |
Scenario
III |
Scenario
IV |
Gross Taxable Income from Business & Profession |
600,000 |
600,000 |
4,000,000 |
4,000,000 |
Amount contributed in Atlas Pension Fund |
@ 12.5% |
@ 20% |
@ 12.5% |
@ 20% |
75,000 |
120,000 |
500,000 |
800,000 |
Maximum ceiling of Contribution for tax credit purposes |
Contribution Amount |
@ 20% |
Max. Amount |
Max. Amount |
75,000 |
120,000 |
500,000 |
500,000 |
Tax Payable* for the Year before Tax Credit under Section 63 |
@ 12.5% |
@ 12.5% |
@ 25% |
@ 25% |
75,000 |
75,000 |
1,000,000 |
1,000,000 |
Tax Credit on Contributions |
9,375 |
15,000 |
125,000 |
125,000 |
Net Tax Payable for the Year |
65,625 |
60,000 |
875,000 |
875,000 |
* The tax rate shall apply as per the respective tax slab of each Participant |
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| Q2) What is the procedure for claiming tax credit? |
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An employee (who is a Participant in APF) may provide documentary evidence of Contributions made during each tax year ending on June 30 to his/her employer who may then under Section 149 (1) make adjustments of tax credit admissible under Section 63 from the tax to be deducted under the head ‘salary’. The employee may claim a tax rebate as per the above illustration (A), depending upon the quantum of the Contributions made during that tax year and the applicable slab of that Participant.
A self-employed Participant may claim the tax credit at the time of filing of his/her Return of total income for each tax year ending on June 30. In the computation of his/her total taxable income and tax payable, the Participant may claim a tax rebate as per the above illustration (1)(B), depending upon the quantum of the Contributions made during that tax year and the applicable slab of that Participant. |
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| Q3) When will the Tax Credit Certificate be sent to the Participant? |
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The Pension Fund Manager shall send on or before 31st July each year a certificate of Contribution made to the Atlas Pension Fund (APF) and Atlas Pension Islamic Fund (APIF) for the previous year ended June 30. The Pension Fund Manager shall also send, before June 30, statement of accounts, as may be required by the employer of the Participant, confirming payment by the Participant to the APF and APIF under Sections 63 and 149(1) of the Income Tax Ordinance, 2001. |
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| Q4) Is the contribution made by the employers a tax admissible expense? |
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For an employer, the contributions in to the APF & APIF on behalf of its employees, is a tax deductible charge, i.e. that the amount of Contribution made by the employer will qualify as expense for tax purposes whilst calculating the taxable income of the employer. When computing the “income from business”, the employer is allowed a deduction for the amount contributed to the Atlas Pension Fund (APF) and Atlas Pension Islamic Fund (APIF) on behalf of its employees as APF and APIF is an Approved Pension Fund as defined under clause 3(c) of the Definitions of the Income Tax Ordinance, 2001. |
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| Q5) What is the Tax Treatment on Retirement of the Participant? |
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At retirement, the Participant shall be entitled to receive:
- Up to 50% of the accumulated balance of his/her Individual Pension Account tax free; and
- The tax shall not to be deducted in case the remaining 50% of the accumulated balance in the Participant’s Individual Pension Account is:
- Invested in an Approved Income Payment Plan of a pension fund manager;
- Paid to a life insurance company for the purchase of an Approved Annuity Plan; or
- Transfer of the amount to other Pension Fund manger for purchase of Approved Income Payment plan.
Any amount withdrawn in excess of 50% of the accumulated balanced as lump sum would be subject to tax under section 156B(1). |
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| Q6) Would the payments from the Approved Income Payment Plan be subject to tax deductions? |
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Yes, the payments from the Approved Income Payment Plan or Approved Annuity Plan would be subject to tax deductions as per the provisions of the Income Tax Ordinance, 2001. |
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| Q7) What is the Tax Penalty (Withholding Tax) on Early Redemptions/ Lump Sum Withdrawals in excess of allowed amount? |
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In the event that amount is withdrawn from the Atlas Pension Fund (APF) and Atlas Pension Islamic Fund (APIF) before retirement, or the lump sum amount withdrawn at retirement is more than the allowed amount (i.e. the amount exceeds 50% of the accumulated balance), then the Pension Fund Manager whilst making payment from Individual Pension Account shall be required to deduct tax under section 156B at the rate specified in Section 12 (6) of the Income Tax Ordinance, 2001.
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| Section 8 - Fee Structure |
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| Q1) What is the fee structure of Atlas Pensions? |
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The fee structure is as follows:
Front End Fee: A front end fee of 3% of the contribution shall be deducted by the Pension Fund Manager from the contributions made into the fund.
Annual Management Fee: Annual Management Fee shall be charged by the Pension Fund Manager. This fee shall be 1.50% p.a. of the fund value, charged on a daily basis.
Trustee Fee: Trustee is entitled to a monthly remuneration which is charged to the Sub-Funds and is calculated as follows:
Net Assets
(Rupees) |
Tariff |
From |
To |
1 |
1 billion |
Rs. 0.3 million or 0.15% p.a. of Net Assets, which ever is higher |
Above
1 billion |
3 billion |
Rs. 1.5 million plus 0.10% p.a. of Net Assets, on amount exceeding Rs. 1 billion |
Above
3 billion |
6 billion |
Rs. 3.5 million plus 0.08% p.a. of Net Assets, on amount exceeding Rs. 3 billion |
Above
6 billion |
- |
Rs. 5.9 million plus 0.06% p.a. of Net Assets, on amount exceeding Rs. 6 billion |
Other Fees & Charges: Other Fees and Charges that are borne by the Sub-Funds include:
a |
Brokerage and Transaction cost(s) |
b |
Legal costs, |
c |
Routine operational bank charges |
d |
Financial costs related to borrowing |
e |
External Auditor’s fee |
f |
Commission’s annual fee |
g |
Taxes applicable to the Trust on its income, turnover, assets or otherwise if any; |
h |
Custodial charges including Central Depository Company of Pakistan charges, if any |
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| Q2) What is the fee charged to the Participants for transfer of balance in Individual Pension Account from one Pension Fund Manager to another Pension Fund Manager? |
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No fee/ front-end fee shall be charged on such transfers. |
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| Section 9 - Comparison between Provident Fund and Atlas Pensions |
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| Q1) Should firms provide an option to their new employees to start their monthly contributions to Atlas Pensions instead of contributions to Provident Fund of the company? |
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Atlas Pensions are beneficial not only for Participants (as explained earlier) but also for the employers because of the following:
- Minimal administration at the end of the employer: The employer is freed from the hassle of managing and maintaining the front office (investments) as well as the back office (book keeping) pertaining to their employees provident fund.
- Paternal responsibility: Looking after employees’ benefits/well being is the employers’ fiduciary responsibility.
- Inherent advantages of a Defined Contribution System: As Atlas Pensions are based on defined Contribution plan, they enjoy inherent advantages of the defined contribution system. Hence, the employer is freed from the associated risks of a Defined Benefit Plan.
Following is a comparison between Atlas Pensions and Provident Funds;
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Atlas Pensions |
Provident Funds |
1 |
Employee can avail a tax credit up to Rs. 100,000 per annum. The tax credit is directly adjusted in monthly salary thereby increasing monthly cash flows. |
Tax credit is not available on employees’ contribution to PF. However, the employer contribution to PF is not added to the income of the employees. |
2 |
In APF, there is free world wide accidental death and disability insurance coverage up to Rs. 4,000,000. It is ideal for employees working in the industrial sector. * |
There is no insurance in PF; the employee just depends on the group insurance scheme of the company. |
3 |
Each employee has an independent pension account which has an asset allocation as per his/her risk profile and investment horizon. |
There is no separate asset allocation for an employee in PF. |
4 |
APF is portable and an employee can continue his Individual pension account while switching from one job to another. |
The PF account of an employee finishes off at the time of switching his/her job and he/she has to make a fresh start in terms of savings. |
5 |
An employee can choose between the pension fund managers if he/she is not satisfied with the performance of the fund manager. There is no additional cost associated with such a transfer. |
If the employee feels that the firm’s provident fund is not growing in line with his/her expectations, he/she has no choice but to hope for the best. |
6 |
Atlas Pension is managed by professional fund managers. |
Provident funds are generally not professionally managed. |
AAML has published two brochures, one on Atlas Pension Fund and other on Atlas Pension Islamic Fund, giving details of the schemes, which are available on web-site. In addition the offering documents of the above funds and financial statements are also available on web-site for review. Should you have questions, we shall be pleased to reply it. If we find that your questions are of general interest to investors, we will also include in the FAQs.
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