Pension Funds Want to Use Life Cycle Funds? OJK Warns of Three Risks
Jakarta, CNBC Indonesia — The Financial Services Authority (OJK) supports the implementation of life cycle funds (LCF) as an investment management strategy for pension funds (dapen). Nevertheless, its application faces several challenges.
The Executive Head of Insurance, Guarantee, and Pension Fund Supervision at OJK, Ogi Prastomiyono, assesses that this scheme can enhance the optimisation of pension fund management throughout the participants’ life cycles.
This approach allows for more optimal pension fund management, from the early phase to nearing retirement. The strategy also balances aggressive instruments to pursue returns for young participants and conservative instruments to safeguard funds for those approaching retirement.
However, there are several challenges in implementing LCF in the pension fund industry.
“Some challenges faced by managers relate to the competency and capability of the managers, second, alternative investment products in the market according to the dapen risk profile, third, the level of literacy regarding investment cycles,” said Ogi at the OJK RDK Press Conference in Jakarta on Monday (6/4/2026).
It is known that the life cycle fund strategy balances the portion of aggressive instruments to chase high returns for young participants and conservative instruments to maintain the security of funds for participants nearing retirement.
He also highlighted that the life cycle-based management concept is a concern for global regulators. OJK states it will adopt international best practices gradually with more thorough preparation so that LCF implementation in Indonesia can run optimally.
On the same occasion, Ogi announced that the pension fund industry’s assets as of February 2026 grew 12.2% year-on-year (yoy) to a value of Rp1.793 trillion for voluntary pension programmes, with total assets valued at Rp413 trillion. For mandatory pension programmes consisting of JHT and BPJS Ketenagakerjaan pensions and pension contribution accumulations, the assets amounted to Rp1.827 trillion, growing 13.86% yoy.