Focus On Improvement, SOE Minister Afraid 9.8 Trillion Pension Fund Deficit Will Be A Time Bomb

JAKARTA - Minister for State-Owned Enterprises (BUMN) Erick Thohir admitted that issues surrounding pension funds still continue to haunt state-owned companies to this day. One of them is that 65 percent of companies are sick.

Because of that, Erick admitted that he would intervene in the management of pension funds in state-owned companies. This is because, if you refer to the law governing pension funds, the management of these funds is carried out by each company's management.

"Indeed, based on the law, pension funds are managed by a company, which in the end, I fear that control and consolidation will become a ticking time bomb," said Erick in a Joint Working Meeting with Commission VI of the DPR in Jakarta, written Tuesday, February 14.

This pension fund management intervention, said Erick, was carried out so that the beneficiaries, namely state-owned pensioners, feel the obligation to pay the funds in a comprehensive manner.

Erick admits that he is worried that it will result in an explosion in the next 1-2 years if the Ministry of BUMN does not intervene.

Moreover, said Erick, the pension fund deficit has reached nearly IDR 10 trillion in 2021. Even now, only 35 percent of state-owned companies are classified as healthy in managing pension funds.

"If we look at this, there is already a sizeable deficit of IDR 9.8 trillion in 2021, this is very large," he said.

Therefore, Erick said that his party would focus on improving pension funds this year. Erick wants both the company and its fund management to be equally good.

"This is an important note, the BUMN is sick, but the management of the pension fund is big or vice versa. The SOEs should be healthy, pension fund management is also healthier, this is part of the financial flow," he explained.

Erick said, the ratio of the ratio of assets to the insurance industry managing pension funds when compared to Indonesia's GDP is only 5.8 percent. This condition makes Indonesia far behind compared to Malaysia which is already at 22 percent and the Philippines at 10.8 percent.

For this reason, said Erick, the Ministry of SOEs continues to encourage the transformation of pension funds so that the welfare of SOE retirees can be guaranteed. Given the number of state-owned pensioners will continue to grow every year.

Erick said, in September 2022, he had issued directives to the finance director and HR director of each BUMN to carry out a due diligence on pension funds.

That way, continued Erick, the intervention carried out by the Ministry of SOEs coincides with the company's participation in managing pension funds.

"So it's not purely managed by retirees so there is professionalism. That way, there won't be any problems later on, he said.

Erick said, the technical instructions for carrying out the due diligence had also been issued in October 2022. Then, is followed by outreach to all pension fund managers. This includes the Corruption Eradication Commission (KPK).

"We have also included the management of the Dapen MP agenda to the aspirations of the shareholders, as well as included the plan for restructuring the Dapen in the management contract," said Erick.

In line with that, Erick explained that the blue book for proper pension fund managers will also be published no later than March 2023.

"Of course in the future we will also have health implementation and monitoring the progress of health implementation (dapen)," he said.