impact lessons for indonesia - iroseminar.idiroseminar.id/materi/download/day-1/iro presentasi -...
TRANSCRIPT
OUTLINE
• Trends pension systems around world
• How does Indonesia compare?
• Ways to encourage pension fund growth
• Pensions + economic development
PESNIONS + DEVELOPMENT
• Strong theoretical argument – pension funds asset growth
spurs capital market development (as source of long-term
financing) which fuels economic development
• Evidence from some countries that this has / can work
(particularly in Latin America, also examples in Asia – Spore/
Malaysia – and happening in Africa- Kenya leading)
• Put also plenty of disappointments (particularly in Eastern
Europe)
DEVELOPMENT NEEDS
Annual Investment Needs Developing
Countries
Meet 2030 SDG
$3.9tn= Need
$2.5tn= Gap
$1.4tn= Spend
Source: World Bank
INDONESIA PORTFOLIOS
Others
0.92%Time Deposit
8.98%
Mutual Fund
10.39%
Bonds and Sukuk
11.72%
Stocks
18.36%
Government
Securities
49.63%
Portfolio of Social Security FundsExc. Taspen and ASABRI
Others
1.95%
Building
1.30%Land
2.28% Land and Building
3.90%
Direct Investment
4.95%
Mutual Fund
7.60%
Time Deposit
11.72%
Share
14.93%
Bonds and Sukuk
25.79%
Government
Securities
25.59%
Portfolio of Occupational Pension Funds
Bonds
57.93%Equity
17.18%
Others
14.97%
Cash
9.92%
GLOBAL FUNDS AVERAGE
Source OJK Data by June 2018
REGULATION
•Overly restrictive asset class limits
•Relative return guarantees
•Focus on short-term returns / volatility
•Short-term performance measurement
•Switching
•Early Access
Short-term
Long-term
REGULATION INDONESIA
•Prescribed/ minimum holdings
•Performance measurement (1 year vs. discount factor)
•No realized investment losses
•ALM vs. cashflow
•Withdrawals
LESSONS
• Capital market instruments complex to create
• Easier to go to banks
• Need to make space for local currency
financing
• Bring pension funds in at START of project
LESSONS FOR INDONESIA
•Think holistically – pension pillars / products should compliment not compete
•Innovative programs / approaches needed to reach informal sector
•Regulation should support long-term investment
•Create investment instruments to meet pension fund needs
•Ensure strong governance and oversight