1. Role of Trustee In Protecting The Pension Fund Under The Pension Fund Under The Voluntary Pension System (VPS) The Voluntary Pension System (VPS) And Other Pension Systems Role of Trustee In Protecting The Pension Fund Under The Pension Fund Under The Voluntary Pension System (VPS) The Voluntary Pension System (VPS) And Other Pension Systems Presented by: Mohammad Hanif Jakhura Chief Executive Officer September 5, 2005 The Central Depository Company of Pakistan Limited

2. Appointment of Trustee according to VPS Rules, 2005 The Pension Fund Manager (PFM) shall appoint a Trustee for every fund The Pension Fund Manager (PFM) shall appoint a Trustee for every fund Trustee and PFM must be independent Trustee and PFM must be independent The Commission may, in the interest of the participants, capital market and public, give directions to the Trustee The Commission may, in the interest of the participants, capital market and public, give directions to the Trustee A Trustee may retire with the prior approval of the Commission A Trustee may retire with the prior approval of the Commission

3. Eligibility Criteria of a Trustee under VPS Rules, 2005 A scheduled bank A scheduled bank Having A+ rating Having A+ rating Been in business for atleast five years Been in business for atleast five years A trust company - subsidiary of a scheduled bank A trust company - subsidiary of a scheduled bank A foreign bank A foreign bank Operating as scheduled bank in Pakistan Operating as scheduled bank in Pakistan Providing Trustee services internationally Providing Trustee services internationally A central depository company approved by the Commission A central depository company approved by the Commission

4. Trustee of VPS VPS Rules, 2005 Trust Deed & Offering Document Income Tax Ordinance, 2001 Companies Ordinance, 1984 Regulatory / Legal Frame work

5. Obligations of the Trustee under VPS Rules, 2005 Take control of all the property of the Fund. The title of all the Fund’s property shall be vested in the Trustee Take control of all the property of the Fund. The title of all the Fund’s property shall be vested in the Trustee [VPS Rule 31 (a)] Be liable for any act or omission of any agent appointed by the Trustee Be liable for any act or omission of any agent appointed by the Trustee [VPS Rule 31 (b)] Ensure that the methods adopted in calculating the value of units are in accordance with the constitutive documents Ensure that the methods adopted in calculating the value of units are in accordance with the constitutive documents [VPS Rule 31 (e)]

6. Obligations of the Trustee under VPS Rules, 2005 (cont….) Obligations of the Trustee under VPS Rules, 2005 (cont….) Ensure that the unit price is calculated and applied in accordance with the provisions of the constitutive documents Ensure that the unit price is calculated and applied in accordance with the provisions of the constitutive documents [VPS Rule 31 (d)] Carry out the instructions of PFM if they are not in conflict with the constitutive documents Carry out the instructions of PFM if they are not in conflict with the constitutive documents [VPS Rule 31 (f)]

7. Obligations of the Trustee under VPS Rules, 2005 (cont….) Ensure compliance with the investment policy and borrowing limitations as set out in the constitutive documents Ensure compliance with the investment policy and borrowing limitations as set out in the constitutive documents [VPS Rule 31 (g)] Issuance of annual report to participants as to whether the PFM has managed the Fund in accordance with the constitutive documents Issuance of annual report to participants as to whether the PFM has managed the Fund in accordance with the constitutive documents [VPS Rule 31 (h)] Ensure that units are allocated after receiving contributions Ensure that units are allocated after receiving contributions [VPS Rule 31 (i)]

8. Protection of Pension Funds through Trusteeship Based on the Trustee’s report to the Commission, the Commission may cancel / suspend / remove the registration of PFM Based on the Trustee’s report to the Commission, the Commission may cancel / suspend / remove the registration of PFM PFM shall account to Trustee for any loss caused to the Fund’s assets due to his negligence / willful act / omission PFM shall account to Trustee for any loss caused to the Fund’s assets due to his negligence / willful act / omission Trustee’s consent would be required by the PFM to appoint auditor for the Fund Trustee’s consent would be required by the PFM to appoint auditor for the Fund

9. KeyOperationalControlsof VPS Trustee Key Operational Controls of VPS Trustee Delivery Vs Payment Delivery Vs Payment Portfolio position Portfolio position Fund position Fund position Daily reporting Daily reporting Review of Fund’s financial statements Review of Fund’s financial statements

10. Thank you !