OJK Dissolves 58 Pension Funds Since 2020

Jakarta (ANTARA) - Indonesia’s Financial Services Authority (OJK) has dissolved 58 pension funds from 2020 to date, the majority of which were employer-sponsored pension funds (DPPK) operating defined benefit pension programmes (PPMP).

Ogi Prastomiyono, Executive Head of Insurance, Guarantee and Pension Fund Supervision at OJK, told a press conference in Jakarta on Monday that the dissolutions were influenced by, among other factors, considerations of efficiency, declining participant numbers and economies of scale.

“It is indeed true that there is dynamism in the administration of pension funds. From 2020 until now, 58 pension funds have been dissolved, the majority of them employer-sponsored pension funds, or DPPK, with defined benefit pension programmes, or PPMP,” Ogi said.

According to Ogi, this situation is in line with the global trend of shifting from defined benefit schemes to defined contribution schemes.

“This does not mean that the sustainability of the pension fund industry is a problem. The homework ahead is actually to deepen the industry by expanding membership,” he said.

Ogi said membership expansion is necessary so that pension funds can become an increasingly optimal financial solution for the public in retirement, whilst also helping to break the cycle of the sandwich generation.

To that end, OJK continues to encourage innovation in pension fund programmes that can reach informal workers, micro, small and medium enterprises (MSMEs), the younger generation and other community groups, including through digitalisation.