The Financial Services Authority (OJK) launched the "Roadmap for the Development and Strengthening of Indonesian Pension Funds 2024-2028".
The chairman of the OJK, Mr Mahendra Siregar, said in a statement, that as the country with the fourth largest population in the world, Indonesia's pension fund industry has enormous potential. He said, "With the policy direction of developing and strengthening pension funds, it is hoped that the pension fund industry can become healthier, more efficient, with integrity, strengthen consumer and community protection, and support national economic growth."
Mr Ogi Prastomiyono, chief executive of OJK‘s Insurance, Guarantee and Pension Fund Supervision unit, officiated at the launch of the Roadmap on 8 July 2024. "This is not just a document, but a joint commitment from all stakeholders in the pension fund industry who collaborate and synergise to create a better Indonesian pension system," said Mr Ogi.
Through the Roadmap, OJK and the other stakeholders aim to respond to various strategic issues to create a healthy pension fund industry, for it to grow and develop sustainably.
The Roadmap is supported by four pillars of development and strengthening principles, namely:
1. strengthening the resilience and competitiveness of the pension fund industry;
2. developing elements in the pension fund industry ecosystem;
3. accelerating the digital transformation of the pension fund industry; and
4. strengthening regulation, supervision and licensing.
These four pillars will be implemented in three different phases in the period 2024 to 2028, starting with the foundation strengthening phase (Phase One), moving on to the consolidation and creating momentum phase (Phase Two), and continuing with the adjustment and growth phase (Phase Three).
The strategic approach in the three implementation phases addresses the challenges that exist in the pension fund industry, including:
• accelerating the digital transformation of pension programmes, including distribution channels;
• increasing financial literacy and inclusion programmes related to pension funds
• consolidating voluntary pension programmes;
• strengthening mandatory pension programmes; and
• developing a database system for pension fund membership programmes.
The pension industry currently faces several challenges, including the mismatch of assets and liabilities, limited human resources in investment management and risk management, limited marketing distribution channels for pension plans, and lack of integrated national pension fund subscriber data.
Based on data from the Central Bureau of Statistics, the pension penetration rate in Indonesia at the end of 2023 was 18.94% of the 147.7m-strong workforce. The target is that by 2028, the penetration rate would be 20%.