OJK Issues New Rule on Pension Fund Investment

The Financial Services Authority (OJK) has announced a new regulation on the basis for assessing pension fund investments which will come into effect on Jul. 1, 2024. The new regulation is outlined in OJK Circular Letter (SEOJK) No. 4/2024, which enacts the mandate of Article 150 paragraph 5 of OJK Regulation (POJK) No. 27/2023 on the Operation of Pension Fund Businesses.

The OJK stated in relation to the SEOJK that there is a need to refine regulations about the basis of the pension fund industry's investment assessments. Meanwhile, SEOJK No. 9/2016 on the Basis for Pension Fund Investment Assessment, as well as the Form, Composition, and Procedures for Submitting Annual Pension Fund Investment Reports will continue to apply until SEOJK No. 4/2024 is in effect.

There are several changes introduced by SEOJK No. 4/2024. First, the elimination of assessment bases for savings. Second, the addition of market or fair value as alternatives to evaluate investments in government securities (SBNs), corporate bonds, and regional bonds. Third, adjustment of the calculation for investments which previously only used effective interest rates to also use their amortized acquisition value.

There are also two new types of investments regulated by SEOJK No. 4/2024 which were not previously regulated in SEOJK 9/2016, namely infrastructure investment funds in the form of collective investment contracts and regional bond investments. OJK management informed through the OJK's website on May 2,2024 that the provisions on investment assessments also apply to investments that adhere to Sharia principles.

1. The assessment bases for each type of investments according to SEOJK NO. 4/2024 include:
2. Only nominal value for on-call deposits and time deposits at banks;
3. Only cash value for bank deposit certificates;
4. Both market value for securities issued by Bank Indonesia, market value and amortized cost for both SBNs, corporate bonds, and regional bonds;
5. Only market value for shares listed on the Indonesia Stock Exchange (IDX);
6. Both market value and net value for mutual funds and real estate investments;
7. Both fair value and amortized cost for medium-term notes;
8. Only fair value for asset-backed securities;
9. Only amortized cost for repurchase agreements (repos);
10. Value set by OJK appraisers for direct participation and land or building investments;
11. Only net asset value for infrastructure investment funds.