OJK Circular No. 4/SEOJK.05/2024 on Pension Fund Investment Valuation Basis

The Financial Services Authority (OJK) issued Circular No. 4/SEOJK.05/2024 to implement Article 150 of POJK No. 27/2023 regarding Pension Fund Business Operations. This regulation updates investment valuation standards by introducing market or fair value alternatives for government bonds, corporate bonds, and regional bonds, while abolishing the previous valuation basis for savings. It also incorporates new investment types such as regional bonds and collective investment contracts for infrastructure, and explicitly extends these valuation principles to Sharia-compliant investments.

Indonesia

Otoritas Jasa Keuangan (Financial Services Authority)

Financial Services Authority Circular of the Republic of Indonesia Number 4/SEOJK.05/2024 concerning the Basis for Pension Fund Investment Valuation

Abstract: That in order to implement the mandate of Article 150 paragraph (5) of Financial Services Authority Regulation Number 27 of 2023 concerning the Conduct of Pension Fund Business, it is necessary to improve regulations regarding the basis for the pension fund industry to conduct investment valuations.

The legal basis for this SEOJK is: Law Number 21 of 2011 as amended by Law Number 4 of 2023, and POJK Number 27 of 2023.

Regulations regarding the basis for pension fund investment valuation are currently regulated in SEOJK Number 9/SEOJK.05/2016 concerning the Basis for Pension Fund Investment Valuation, Form and Structure, and Method of Submission of Annual Pension Fund Investment Reports (SEOJK 9/2016). Based on this SEOJK, there are regulatory substances, one of which regulates the form, structure, and method of submission of annual pension fund investment reports, while in implementation, this substance has been abolished with the issuance of SEOJK Number 3/SEOJK.05/2019 concerning the Form and Structure of Periodic Pension Fund Reports, so the substance in SEOJK 9/2016 needs to be abolished.

There are 2 (two) types of new investments that were previously not regulated in SEOJK 9/2016, namely regional bond investments and collective investment contract infrastructure investment funds.

Provisions regarding investment valuation also apply to investment types using Sharia principles.

The improvements made include:

the removal of the valuation basis for savings;
adding alternative valuation methods for government securities, corporate bonds, and regional bonds in the form of market value or fair value; and
adjusting the calculation for investment types using amortized acquisition value, which previously only used the effective interest rate.

Note: This SEOJK takes effect on July 1, 2024. At the time this SEOJK takes effect, SEOJK Number 9/SEOJK.05/2016 concerning the Basis for Pension Fund Investment Valuation, Form and Structure, and Method of Submission of Annual Pension Fund Investment Reports is abolished and declared invalid.