Indonesia’s Pension Funds Seen Rising 20% This Year

Jakarta Globe, Thomas E Harefa, Oct 21, 2014

An employee of the Indonesia Stock Exchange takes a nap while others work in
 Jakarta on July 10, 2014, when stocks closed at the highest since May 2013.
 (AFP Photo/Adek Berry)

Jakarta. Indonesia’s Financial Institution Pension Fund Association, or ADPLK, estimates that pension funds under management at its 23 members will rise 20 percent by the end of this year.

The target is based on a new government policy that allows companies to invest in a reserve for an employee’s severance payment through a pension fund, said ADPLK chairman Nur Hasan Kurniawan on Monday.

The funds of 23 ADPLK members increased to Rp 31 trillion ($2.6 billion) at the end of the first half of this year, from Rp 29 trillion at the end of last year, Nur Hasan said, adding that the amount of funds accounted for 18 percent of the total of Rp 174 trillion in the country’s pension funds.

In Indonesia, a financial institution pension fund is a third-party financial service that manages pension funds for customers, as opposed to an employer’s pension fund, in which the employer or company manages the funds for their employees.

Lack of knowledge has led the majority of Indonesians to underestimate their pension spending.

Only 3.5 million employees out of 63 million workers in the formal sector have pensions fund, either from financial institutions or their employers, ADPLK data showed.

Investor Daily