Govt conservative in the licensing of pension funds
Govt conservative in the licensing of pension funds
JAKARTA (JP): An analyst yesterday hailed the government's
conservative stance in licensing pension funds in view that the
industry is somewhat new in the country.
"Awareness in establishing and participating in pension funds
is a new phenomenon here. I think this development has something
to do with the monetization process in our country," Didik J.
Rachbini, chairman of the Institute for Development of Economics
and Finance, said Saturday.
Didik suggested that the government has remained conservative
about pension funds because they manage the people's money.
He said the government can learn from the liberalizing of the
country's banking industry, which resulted in the country having
more than 200 banks in operation.
"Learning from past experience with our banking industry, we
should focus more on quality rather than quantity in developing
pension funds," Didik told The Jakarta Post.
The Ministry of Finance has so far issued licenses to 191
companies to establish their own pension funds. It is still
processing 252 other proposals to establish pension funds.
A number of parties criticized the government for what they
called the government's slowness in processing proposals for the
establishment of new pension funds.
Director General of Financial Institutions Bambang Subianto
said last week that such slow license processing was often caused
by the incompleteness or incorrectness of documents submitted
with proposals.
Meanwhile, Director General of State-Owned Companies Bacelius
Ruru said pension funds managed by 42 state firms -- mostly in
the form of foundations -- are still underfunded by 43.4 percent.
Ruru added that because of such underfunding, the finance
ministry, as the shareholder of state firms, is unable to approve
their proposals to make their pension funds legal entities as
mandated by the 1992 Pension Fund Law.
Under Law No. 11/1992 on pension funds, any pension fund run
by a company should get approval from the finance ministry to
make it a legal entity.
Didik suggested that companies which are unable to afford to
establish their own pension funds better join existing reputable
and reliable pension funds, like the one run by state-owned Bank
Negara Indonesia 1946.
Requirements
He proposed that the government establish strict and rigid
requirements to better control the establishment of pension
funds.
"We can again learn from our experience. Just look at state-
owned pension fund company PT Taspen, whose financial management
is still not transparent, like how it channeled its fund to the
Barito Pacific group," Didik said.
He said the government should not totally allow market
mechanisms to dictate the pension fund industry. It should
complement it with proper regulations so that the existing
pension funds, and those wanting to set up new ones, can run
their businesses more professionally. (rid)