Govt reviews limits on use of pension fund

JAKARTA (JP): The government will soon ease investment restrictions imposed on pension funds in a bid to further stimulate capital market activities, says an official.

The chairman of the Capital Market Supervisory Agency (Bapepam), Bacelius Ruru, said yesterday the planned revision is expected to further raise pension funds' portfolio investments.

"I hope the Ministry of Finance will soon issue the new investment policy," he told business executives at a seminar on the business strategy of pension funds.

Ruru said his office and the Directorate General of Financial Institutions have reached an agreement on the need of easing the investment restrictions. "It is now only a matter of time," he said.

The government imposed a ruling on investments of pension funds in February last year in an effort to protect the interest of their members.

The present ruling allows pension funds to invest only in securities (stocks and bonds) which have been listed on stock exchanges for at least three years. It means that pension funds are prohibited from buying stocks at the primary market, or before shares are listed.

An executive of the pension fund of the state-owned Bank Negara Indonesia (BNI) said yesterday that the government has given unequal treatment to pension funds.

Primary market

"Restricting pension funds from buying shares during the primary offering period is not realistic," the executive said at the seminar.

He explained that shares available at the primary market are not only cheaper but also have better quality than those already listed.

Pension funds have lost the opportunity to get higher capital gains due to the restrictions, he said.

"There are a number of good stocks being offered at the primary market but we cannot buy them," he said, adding that the 35 percent ceiling given to pension funds to invest in securities (shares and bonds) is also too small.

Securities analysts earlier also called on the government to allow pension funds to buy stocks or bonds at the primary market.

The existing ruling also restricts pension funds from buying more than 10 percent of shares or bonds issued by a single listed company.

Bambang Subianto, the director general of financial institutions, said the investment restrictions are still needed to protect pension fund members.

He said that pension funds' investments should be prudently managed so that their members will be able to get their pension benefits as promised.(hen)