FAQs - General
1) Why invest in a Mutual Fund?
Mutual Funds are a popular way to enhance growth and reduce risk. Depending on your objectives and the amount of risk you’re willing to accept, our investment representative can help you select the fund that best meets your needs.
2) What information must I receive before buying mutual funds in general and Atlas Funds in particular?
Atlas Funds provide the copy of prospectus/offering document and latest annual or quarterly financial reports to its investors before accepting their initial investment. In addition, monthly Fund Managers’ reports are available on web-site. The purpose is to provide the complete disclosure of information about the fund. Information listed in the prospectus includes the following:
The objective: This allows you to find a fund that matches your investing objective.
Performance: This describes how the fund has performed in the past. Since the funds may change managers or limit choices to particular sectors of the economy, past performance does not guarantee future success.
Risk: Each fund must list the level of risk involved in achieving its objectives.
3) How does a fund produce income for the investors?
When a fund invests in debt, it requires interest payments at specific times. A fund investing in the stock of corporation receives whatever cash dividends that company pays. Interest payments and dividend income by law must be passed through to the fund’s shareholders i.e. to you. You can even have that income reinvested in more fund shares. Also, when a fund actually sells a stock or bond that has increased in value, the fund realizes a capital gain. Periodically, the fund will distribute such gains to its shareholders in the form of dividend warrants unless you have instructed it to reinvest the gains.
4) How do I find out how my mutual fund is performing?
By contacting our representative in the investor services division. Also, the value of securities a mutual fund holds is computed every day and made publicly available. You can get that value by looking it up in daily newspapers.
5) Is my principal protected?
Unlike a bank deposit, the value of your principal can rise or fall. People invest in mutual funds because of the fact they want their principal to rise over time. The value of a fund depends on the value of the securities it owns. Stocks and bonds fluctuate in value and therefore so do mutual funds.
6) Can I lose principal in a Mutual Funds Investment?
Because the value of a fund fluctuates, when you sell (“redeem”) your shares, the price may be more or less than what you paid for it. Just as the value of your home doesn’t always stay the same, neither does the value of a mutual fund. If you sell your home soon after you buy it, chances are greater you won’t make a profit. The same is true for mutual funds which is a long-term investment.
7) Should I Invest funds that I will need shortly?
Probably not. Most people want assurance money they immediately need will be there when they need it. Mutual funds (except for money market funds) by their nature fluctuate in value and therefore may not be the most comfortable place for your emergency funds.
8) How do I decide which Mutual Fund I should invest in?
Talk to your investment representative about your needs – why you’re making the investment in the first place. The Representative will identify those funds that provide the best combination of return and safety for you and what you want to accomplish with the investment.
9) How many investments does a typical fund have?
A typical mutual fund will invest in 30 to 100 different securities. The very large number of investments gives most funds much more diversification than any individual could afford and, historically, greater diversification has meant greater safety.
10) What types of investments are in the mutual funds?
Atlas Funds buy stocks (equity) and debt instruments. Stocks represent a share of ownership in a corporation. As an owner the mutual fund (and through it, you) shares in the profits (or losses) of the corporation. Debt, such as bonds that will be paid off at a stated date in the future; the mutual fund receives interest payments and after paying expenses, passes them along to you as dividends.
11) How can I purchase units?
By filling a simple application form, which is attached at the end of this document or can also be downloaded from our website www.atlasfunds.com.pk or by visiting any of our offices, (see distribution centres at the end of the document). You can also call our investor services division at 111-MUTUAL (111-6888-25) to have a copy of the form delivered at your address.
12) How are the units priced?
The units are priced based on the NAV (net asset value). The unit holders may be required to pay an entry load at applicable rates at the time of purchasing the units. The entry load is calculated with reference to the NAV of the scheme on the date of purchase of units. The NAV is the current market worth of a mutual fund unit. It is calculated on business days by taking the funds’ total investments, cash and any accrued earnings deducting liabilities, and dividing the remainder by the number of units outstanding.
NAV of units under any fund/ scheme shall be calculated as shown below.
NAV (Rs.) =
(Market or Fair Value of the fund investments + Current Assets – Current Liabilities and Provisions)
No. of units outstanding in the fund
13) What documentation will I receive?
An Account Statement is sent to you by post stating the number of units allotted, not later than 15 days from the date of purchase. Unit Certificates are also available on the request of the unit holder.
14) What happens to the income received by the mutual fund?
The income received is credited to the scheme and constitutes part of the NAV. At the end of the financial year mutual fund distributes 90% of the income (excluding capital gains and capital appreciation) as dividend or bonus certificates or units.
15) How can I keep track of my investments?
You could call us at 111-MUTUAL (111-6888-25) and speak to our representatives in the investor service division or you can view your Account Statement on our website www.atlasfunds.com.pk.
16) What are the charges that could be applicable to me?
There will be a one time sales load generally referred to as front-end load, which you will pay at the time of purchase of units. This entry load is charged as a percentage of the NAV. Generally it is 2% of the NAV, which comes to Rs.10 for a 500 Rupee unit.
17) How long do I need to hold my units?
There is no lock-in in the case of open-ended funds. Except for the book closure dates, you can redeem/ encash your units at any time of the year. You will promptly receive the amount of redeemed units at your registered address or directly in your bank account within 6 working days.
18) How do I make withdrawals?
These can be made either by redeeming units (receiving money) or by affecting a switch from one scheme to another (receiving another fund’s units).
FAQs - Atlas Pension
Section 1 - Pension Funds / Plans in General
1) What is a pension fund?
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.
2) What are different types of pension plans?
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
1) What is Atlas Pensions?
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 the following Sub-Funds (i) Equity Sub Fund, (ii) Debt Sub Fund, and (iii) Money Market Sub Fund 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 or 25 years of maintaining a VPS. The Participant on retirement can withdraw up to fifty 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.
2) Who can join Atlas Pensions?
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.
3) What are the governing laws pertaining to Atlas Pensions?
Following are the governing laws pertaining to Atlas Pensions:
- Voluntary Pension System Rules, 2005
- Income Tax Ordinance, 2001
4) What are the advantages of joining Atlas Pensions?
Following are advantages to the Participants in case they join Atlas Pensions:
- 1. 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.
- 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 or 25 years since the age of first contribution to a pension fund.
- 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
If a Participant has to retire early due to specified disability that renders him/her unable to continue any employment, it will be treated that the Participant has reached retirement age at the date of such disability. The Participant shall be required to submit satisfactory medical evidence from a medical board that is approved by the SECP. All relevant provisions relating to retirement shall apply accordingly.
- Job Portability / Mobility
7. Atlas Pensions is 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.
- 1. Choice of investing money as per investment horizon and risk appetite through choosing one of the available Allocation Schemes
5) How do Atlas Pensions work?
Atlas Pensions consists of APF and APIF and each of these pension funds comprises the following Sub-Funds:
- Equity Sub-Fund
The objective of Equity Sub-Fund is to achieve long term capital growth. It shall invest primarily in equity securities with a minimum investment of 90% of its net asset value in listed shares.
- 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 a weighted average duration of the sub-fund not exceeding 90 days.
- Equity Sub-Fund
6) What is an Individual Pension Account?
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 an individual folio number that must be used for any further correspondence. All contributions made by the Participant shall be credited to his/her Individual Pension Account after realization of amount and be used to purchase the Units of the Sub-Funds according to the Allocation Scheme selected by the Participant.
7) What are the Allocation Schemes?
|01. High Volatility||Long term capital growth||Investors with long term investment horizon and/or high tolerance for risk.|
|02. Medium Volatility||Return along with some capital appreciation||Investors with long to medium term investment horizon and/or moderate tolerance for risk.|
|03. Low Volatility||Return with more focus on capital preservation||Investors with medium to short term investment horizon and/or lower tolerance for risk.|
|04. Lower Volatility||Regular income along with capital preservation||Investors nearing retirement age|
|05. Lifecycle||Seeking capital growth during the younger years and capital preservation during the later years of life by varying allocation between the Sub-Funds in accordance with the age and risk tolerance capability of the Participant.||Investors wanting to adopt a systematic investment approach|
|06. Customized||A personalized investment between Sub-Funds keeping in consideration the Participant’s risk/return profile, incorporating both the person’s ability and willingness to take risk.||Investors wanting to adopt a customized investment approach|
ALLOCATION SCHEMES UNDER ATLAS PENSION FUND (APF)
Money Market Sub-Fund
|(i) High Volatility||
|(ii) Medium Volatility||
|(iii) Low Volatility||
|(iv) Lower Volatility||
* Note: Customized allocation scheme should only be selected by participants who have an awareness of the various risks associated with investing in a particular assets class and are capable of making an informed investment decision after reviewing their risk/return requirements.
8) Can I change my Allocation Scheme?
A participant can change from one Allocation Scheme to another Allocation Scheme at any time till retirement.
9) How much risk should I take with my money?
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.
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
Medium to High Risk
Lower to Medium Risk
|Investors with long term investment horizon and/or high tolerance for risk.|
|Customized Allocation Scheme||Higher in early years and lower in later years
Dependent on the percentage selected within the given range.
Medium to High Return
Lower to Medium Return
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.
10) When can Participants receive their Account Statement?
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, in case 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.
Section 3 - Retirement
1) What is the retirement procedure?
- 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.
- 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.
Section 4 - Withdrawal before Retirement
1) What happens if a Participant wants to withdraw his/her accumulated amount before retirement age?
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 redemption will be subject to deduction of Income tax at his/her average tax rate for the last three consecutive years.
2) What is the procedure for early withdrawal (i.e. withdrawal of accumulated balance before retirement)?
- 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.
Section 5 - Death
1) What happens incase of death of a Participant?
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.
2) What are the options available to the Participant’s nominees in case of death of Participant?
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.
3) What is the procedure for redemption of Units in the event of death of the Participant?
Step 1: The Units shall be redeemed on the Dealing Day on which the intimation of death of Participant is received in writing (or through such means as approved by the Commission) and transferred to the Individual Pension Account of the deceased Participant in the lower volatility scheme offered by the Pension Fund Manager.
Step 2: 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 nomination form or succession certificate issued by a court of competent jurisdiction.
Each of the nominee(s) shall then have the following options, namely:
- Withdraw his/her share of the amount subject to the conditions laid down in the Income Tax Ordinance, 2001;
- Transfer his/her share of the amount into his/her existing or new individual pension account or income payment plan account to be opened with a Pension Fund Manager, according to VPS Rules, 2005;
- Use his/her share of the amount to purchase an annuity/deferred annuity on his life as provided in the VPS Rules, 2005, from a Life Insurance Company.
If any amount in excess of the allowable amount is withdrawn as cash by the nominee(s), then tax will be deducted before making payments.
Section 6 - Insurance
1) Is there any insurance coverage extended to Participants?
Insurance Coverage to the Participants of Atlas Pension Fund (APF):
The Pension Fund Manager provides worldwide accidental death and disability coverage up to the age of 60 years, through Jubilee Life Insurance Company Limited. The sum insured shall be the lower of 100 times of monthly contribution amount or Rs. 4,000,000/- (The premium cost is to be borne by the participant who opts for insurance coverage and it will be deducted from the contribution amount).
Takaful Coverage to the Participants of Atlas Pension Islamic Fund (APIF):
The Pension Fund Manager provides worldwide accidental death and disability coverage up to the age of 60 years to the participants of APIF on their contributions through Pak Qatar Family Takaful Limited. The sum insured shall be the lower of 100 times of monthly contribution amount or Rs. 4,000,000/- (The premium cost is to be borne by the participant who opts for insurance coverage and it will be deducted from the contribution amount).
Section 7 - Taxation
1) What is the tax credit allowed on contributions made in Atlas Pensions?
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
- 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.
2) What is the procedure for claiming tax credit?
An employee 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) of the Income Tax Ordinance 2001 make adjustments of tax credit admissible under Section 63 from the tax to be deducted under the head ‘salary’.
A self-employed individual may claim tax credit at the time of ling of his/her Return of Total Income for each tax year ending on June 30.
3) Would the payments from the Approved Income Payment Plan be subject to tax deductions?
No, the monthly installments from an Approved Income Payment Plan or Approved Annuity Plan are exempt from tax deductions as per Clause (23B) of Part I of Second Schedule of Income Tax Ordinance 2001, provided that the investment is made for a minimum period of ten years.