Regulation on pension funds questioned

JAKARTA (JP): The government should lessen the investment restriction on pension funds to give them more of a chance to generate high returns on investments, said Chairman of the Indonesian Association of Pension Funds Kadarisman.

He said here over the weekend that the investment restriction on pension funds as stipulated by the Minister of Finance's decree No. 231/93 is no longer relevant today because it is considered too protectionist.

He said that the government should not be overly cautious on protecting the pension funds because the country already has a rating agency on listed bonds and shares, PT Pefindo.

Kadarisman was speaking to reporters during a press conference held by the Management Center of the Faculty of Economy of the University of Indonesia in conjunction with its plan to hold a seminar on pension funds here on Oct. 5 and 6.

The seminar, which will take place at Borobudur Intercontinental Hotel, will feature several speakers, including Chairman of the Capital Market Supervisory Board (Bapepam) Bacelius Ruru, House member A.A. Baramuli and Director General of Taxes Fuad Bawazier.

According to the decree, the amount of investments made by a pension fund on shares listed on stock exchanges is limited only at 10 percent for each issuance. Pension funds are also banned from investing in shares which are considered to have high risks such as shares, bonds and other valuable papers listed on the stock exchanges for less than three years.

Problems

Kadarisman also said over the weekend that the pension funds also still face other problems such as taxation and the accounting standard for the financial reports of the funds.

"Those problems affect the disclosure principle of the funds' financial report," he said, adding that a transparency is needed to attract more participants to join the funds.

Djunaedi, the chairman of Pension Funds Experts Association, shared Kadarisman's view, saying that the investment restriction does not give fund managers ample flexibility to invest.

He said that most of pension funds in the country deposit their money in banks and the rest could be invested in properties and equity participation.

"Only around five percent of the total national pension money is deposited in bonds or shares," he said.

According to Djunaedi, the total amount of money collected by the country's 367 pension funds is projected to reach Rp 11.4 trillion (US$5.26 billion) as of the end of this year. (05)