History of Pension Funds in Indonesia

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Pension Fund runs pension program to provide pension benefits for participants. There are generally two types of pension programs offered by the Pension Fund, the first one is Program Pensiun Iuran Pasti and the second one is Program Pensiun Manfaat Pasti. Program Pensiun Iuran Pasti is a pension plan that amount of benefits earned by participants who retire has been defined in the regulation of pension funds so the fees may vary. While Program Pensiun Manfaat Pasti is a pension plan that the amount of the contribution paid by the employees has been stated in the regulations of the Pension Fund. All of the contributions and investment results recorded in the account of each participants’ pension benefits.

UU No. 11 Tahun 1992 contains provisions regarding establishment and procedures of validation to become a legal entity. Moreover, this regulation also contains provision about installment and management of wealth pension fund program.

In Indonesia there are 427 Pension Fund that have been validated by Ministry of Finance and Otoritas Jasa Keuangan (OJK) for the period 1992 to 2014. However, since December 31st 2014 there are only 267 Pension Fund that actively operating, in which 242 of them are DPPK (Dana Pensiun Pemberi Kerja), including PPMP (Program Pensiun Manfaat Pasti) and PPIP (Program Pensiun Iuran Pasti), and the remaining 25 are DPLK (Dana Pensiun Lembaga Keuangan). In total, that number has increase 2 points from previous year. This matter happened because there are 4 new establishment of Pension Fund (DPLK PT Asuransi Generali Indonesia, Pelindo Purnakarya, Wijaya Karya PPIP, and Otoritas Jasa Keuangan) and 2 dismissal of Pension Fund (Indorama Synthetics dan Rajawali Nusindo) in 2014. Furthermore, in 2014 there are 3 DPPK that switch their program from PPMP to PPIP (Galva, Bukopin dan Pegawai Pembangunan Jaya Group)

CHAPTER 3

ANALYSIS

Development Analysis of Pension Fund in Indonesia for period 2010 -2014

This chapter refer to analysis result of pension fund in Indonesia in the period of 2010 until 2014, that has been disclosed in Buku Statistik Dana Pensiun 2014 issued by Otoritas Jasa Keuangan in 2015. This result only focused on development of pension fund in Indonesia that specialized on a few discussion, which are:

- Development of Pension Fund Amount in 2010 - 2014

- Development of Pension Fund Program in 2010 - 2014

- Development of Pension Fund Participants in 2010 – 2014

- Development of Pension Fund Net Asset Growth in 2010 - 2014

- Development of Pension Fund Investment Growth in 2010 - 2014

- Development of Pension Fund Investment Portofolio in 2010 – 2014

- Development of Pension Fund Investment Performance in 2010 – 2014

Pension Fund is a legal entity that managed and operate program that ensure Pension Benefit. Generally, pension fund industry consists of Dana Pensiun Pemberi Kerja (DPPK) and Dana Pensiun Lembaga Keuangan (DPLK). In the execution, DPPK can carry out Program Pensiun Manfaat Pasti (PPMP) and Program Pensiun Iuran Pasti (PPIP), when DPLK can only carry out Program Pensiun Iuran Pasti (PPIP).

The following are the discussion that will be analyze in each topic:

3.1 Development of Pension Fund Amount

In Indonesia there are 427 Pension Fund that have been validated by Ministry of Finance and Otoritas Jasa Keuangan (OJK) for the period 1992 to 2014. However, since December 31st 2014 there are only 267 Pension Fund that actively operating, in which 242 of them are DPPK (Dana Pensiun Pemberi Kerja), including PPMP (Program Pensiun Manfaat Pasti) and PPIP (Program Pensiun Iuran Pasti), and the remaining 25 are DPLK (Dana Pensiun Lembaga Keuangan). In total, that number has increase 2 points from previous year. This matter happened because there are 4 new establishment of Pension Fund (DPLK PT Asuransi Generali Indonesia, Pelindo Purnakarya, Wijaya Karya PPIP, and Otoritas Jasa Keuangan) and 2 dismissal of Pension Fund (Indorama Synthetics dan Rajawali Nusindo) in 2014. Furthermore, in 2014 there are 3 DPPK that switch their program from PPMP to PPIP (Galva, Bukopin dan Pegawai Pembangunan Jaya Group).

Based on the type, DPPK are the majority of Pension Fund entity compared to DPLK for the period 2010-2014. However, amount of DPPK experiencing a decrease each year while DPLK amount is generally constant. (Graphic 1)[pic 2]

Graph 1. Amount of Pension Fund 2010-2014

3.2 Development of Pension Fund Program

Based on the program of Pension Fund, amount of DPPK that perform PPMP is more than PPIP. Graphic 03 shows that in the period of 2010 to 2014, the number of DPPK PPMP experiencing a decrease each year. In that period, amount of DPPK PPMP decrease by 16 Pension Fund. In the other hand, the amount of DPPK PPIP experiencing an increase by 7 Pension Fund. Hence, in 2010 amount of DPPK PPIP decrease by 1 Pension Fund (Graphic 2). [pic 3]

Graph 2. Changes in the amount of Pension Fund Program in DPPK 2010-2014

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3.3 Development of Pension Fund Participants

The number of participants of the Pension Fund in 2014 as many as 3,925,444 people, and there is an increase of 291,799 people (7.43%) compared to 2013. Of these conditions, the increase occurred in the DPLK participants is higher than DPPK (Table 1).[pic 4]

Table 1. Pension Fund Participants Year 2013 and 2014

Based on data from the Pension Fund participants growth during the period 2010-2014, the number of participants of the DPLK continues to increase, otherwise the number of participants of DPPK decreased. Since 2010 the percentage of the number of participants of the DPLK is greater than the percentage of the number of participants of the DPPK (Graph 3).[pic 5]

Graph 1. The Amount of Pension Fund Participants Based on Type of Pension Fund Year 2010-2014

3.4 Growth of Pension Fund’s Net Asset

Within five years, the assets of the Pension Fund continues to increase. In general, the value of pension fund assets had