Taspen wants higher investment limit

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.