Documents Required for Approval of Superannuation Funds in Pakistan

Planning for retirement is crucial for financial security. In Pakistan, Approved Superannuation Funds (ASFs) offer a structured approach for employers to provide long-term retirement benefits to their employees. This article delves into the concept of ASFs, explaining their benefits, requirements for approval, and the application process.

What are Approved Superannuation Funds?

ASFs are employer-sponsored retirement schemes established under an irrevocable trust in connection with a trade or undertaking carried on in Pakistan. They aim to provide financial security to employees after retirement by offering annuities or pensions. These funds operate under specific regulations outlined in the Income Tax Ordinance, 2001.

Benefits of Approved Superannuation Funds

There are several advantages to establishing and utilizing an ASF:

  • Employee Benefits: Employees gain a sense of security and financial planning for their retirement years. ASFs offer a guaranteed income stream through annuities or pensions upon retirement.
  • Tax Advantages for Employers: Contributions made by an employer to an ASF are considered a deductible business expense, reducing their taxable income. This can lead to significant tax savings for companies.
  • Tax Benefits for Employees: Up to a certain portion of the annuity or pension received by an employee from an ASF may be exempt from income tax. This incentivizes employees to contribute to the fund and plan for their future.
  • Improved Employee Morale and Retention: ASFs can boost employee morale and loyalty by demonstrating the company’s commitment to their long-term well-being. This can potentially reduce employee turnover.

Requirements for ASF Approval

The Income Tax Ordinance establishes specific criteria that an employer-sponsored retirement scheme must meet to be approved by the Commissioner of Income Tax:

  • Irrevocable Trust: The fund must be established under an irrevocable trust specifically linked to a trade or undertaking carried on in Pakistan. This ensures that fund assets are dedicated to employee benefits and cannot be withdrawn by the employer.
  • Minimum Employee Coverage: At least 90% of the employees in the trade or undertaking must be employed within Pakistan. This focuses the benefits on employees contributing to the Pakistani economy.
  • Sole Purpose: The sole purpose of the fund must be to provide retirement benefits to employees. This includes annuities or pensions upon:
    • Reaching a specified retirement age.
    • Incapacitation before retirement.
    • Death of the employee, with benefits payable to dependents.
  • Employer Contribution: The employer in the trade or undertaking must be a contributor to the fund, demonstrating their commitment to the scheme.
  • Benefits Payable in Pakistan: All annuities, pensions, and other benefits granted by the fund must be payable only within Pakistan.

Application Process for ASF Approval

The application for ASF approval is submitted to the Commissioner of Income Tax by the trustees of the fund. The application must be accompanied by the following documents:

  • Trust Deed: A copy of the instrument establishing the irrevocable trust for the ASF.
  • Fund Regulations: Two copies of the fund’s regulations and rules, outlining its operation and administration.
  • Financial Accounts (Optional): If the fund has been in existence for any period before the application, two copies of its audited accounts for the preceding three years are required.
  • Additional Information: The Commissioner may also request further information as needed.

Maintaining Compliance:

Once an ASF is approved, the trustees are responsible for ensuring its ongoing compliance with the Income Tax Ordinance and its own set of rules. This includes:

  • Maintaining proper records of contributions and payments.
  • Timely filing of tax returns for the fund.
  • Notifying the Commissioner of any changes made to the fund’s regulations or rules.


Approved Superannuation Funds offer a win-win scenario for both employers and employees in Pakistan. Companies benefit from tax savings and improved employee relations, while employees gain long-term financial benefits and a sense of security. Understanding the requirements, application process, and benefits associated with ASFs can help businesses make informed decisions about establishing and managing these valuable employee retirement schemes.

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