Taspen wants higher investment limit

The Jakarta Post, Jakarta

State owned pension firm PT Taspen has asked for an exemption from a government ruling that places limits on the size of investments made by pension and insurance companies, arguing that the company was not yet ready to apply the ruling.

The new ruling, which has been effective since Aug. 1, bans pension or insurance firms from investing more than 20 percent of their money in one bank or entity to help minimize risk in case the latter goes bankrupt or defaults on its obligations.

"We're in the process of appealing (to the government), so that the (investment) limit can be higher than 20 percent," Taspen president Achmad Subianto told reporters on Monday.

He explained that the dispensation was needed because there are now fewer banks where pension and insurance firms could put their money safely as a result of the government's bank restructuring program, which reduced the number of banks, particularly state-owned ones.

State banks are generally deemed a safer investment target since they are owned by the government.

"We used to have plenty of state banks, but not any more after the mergers that have taken place," Achmad said.

While the policy is seen by the industry as positive in helping provide protection for the companies, as well as their clients, some of the companies have found the ruling difficult to comply with.

Taspen, with a significant part of its investments in one bank -- Bank Mandiri -- is among those having problems in adjusting.

Achmad admitted that the company's investments in Mandiri formed the largest part of its investments in the banking sector, accounting for around 30 percent.

Most of investments from pension funds and insurance firms in the country currently are made in banks in the form of time deposits and savings -- as well as bonds, which have now become a trend as another alternative for investment.

Achmad said that the funds currently being managed by Taspen amounting to Rp 19 trillion (about US$2.32 billion), which were collected from around 3.7 million government employees.

Last year, the company booked a net profit of some Rp 200 billion.

Mandiri president ECW Neloe reported on Monday that under the new ruling, the bank would lose about Rp 1.8 trillion of funds collected from pension and insurance firms, but the withdrawals would not hurt the bank as it had ample liquidity.