KARACHI, Aug 23: Finance Minister Shaukat Aziz urged mutual fund industry, banks and insurance companies to look at the possibility of designing products to cater to the needs of retiring people by offering retirement pension schemes.

He was speaking at a “Performance Excellence Award” ceremony held under the auspices of the Mutual Funds Association of Pakistan (MUFAP) in recognition of NIT’s good performance.

Mr Shaukat observed that in Pakistan, mutual funds had thus far, not catered to the retirement market assets and that potential for growth in assets of mutual funds, when they provided effective products to tap that market, was enormous.

The finance minister promised the industry that the government would ‘go an extra mile’ and provide whatever tax benefits that were needed in that field. He said: “I understand that the Securities and Exchange Commission of Pakistan is preparing a pension scheme for the private sector” and added that the Ministry of Finance had also created an office of the Actuary to look at the pension in the public sector.

He stated that mutual fund industry should focus on pension market, initiate new products and professionalise the asset management business. “Like anywhere in the world, it is the responsibility of mutual fund sector primarily the asset management companies initiated by dealing financial institutions to introduce schemes for retirement planning, pension funds and providing market based effective returns to this class of savers,” Mr Shaukat said.

The finance minister praised the performance of NIT and stated that the management of NIT by ‘pursuing prudent policies, application of mind, sense of responsibility and by taking timely decisions’ had shown a path to managers of mutual funds and the corporate sector. He said that NIT, which was the premier fund of the country and in which large investment had been made by the general public, small investors as well as institutions, was in bad shape a couple of years ago. “However, the superior performance of recent past has alleviated their problems to a large extent and the investors in general have benefited,” said the minister, adding that with a year-on-year appreciation of 105 per cent in its Net Asset Value (NAV), NIT had outperformed the benchmark KSE-100 share index.

Mr Shaukat said that after ABAMCO’s Islamic fund, he had learnt that Al-Meezan Investment Fund was also launching a Shariah compatible open-end Islamic Fund. The finance minister observed that the reduction in interest rates in recent past and the increased inflow of foreign remittances into the country had restored balance to the economy. “Corporate earnings and payouts are showing appreciable year-on-year growth for the second consecutive year, and for the first time perhaps,” he said.

Mr Shaukat said the equity markets were providing superior returns as compared to all other alternatives, even on a risk adjusted basis. The minister affirmed that those fundamental factors had contributed in making the Karachi Stock Exchange ‘the best performing equity market’ in the world in the financial year 2002-03.

Speaking earlier, Mutual Fund Association of Pakistan chairman Zaigham Mahmood Rizvi paid tributes to NIT chairman Tariq Iqbal Khan for his ‘professional and proactive leadership’ of the largest public sector open-end fund for giving investors handsome returns and NAV growth. He said there were large number of closed-end funds, as well as money market funds and Islamic funds and through similar programmes MUFAP intended to acknowledge best performers in each category.

Mr Tariq observed that the entire investment portfolio of the Fund had been evaluated with respect to the future prospects of investor companies and provisions had been recorded against permanent impairment in the value of investment portfolio, where required. He said that NIT was the largest investor in the Corporate Sector in Pakistan and its nominees sat on the boards of 250 listed companies.

Others who spoke on the occasion included Karachi Stock Exchange chairman Firozuddin A. Cassim, KSE managing director Moin Fudda, and Arif Habib Investment Management Fund CEO Nasim Beg.

ABAMCO Limited executive director Ali Jehangir Siddiqui made concluding remarks.