Circular Letter of the Financial Services Authority Number 5/SEOJK.05/2018 Regarding the Report on the Supervision Results of the Sharia Supervisory Board on Pension Funds Implementing Sharia-Based Pension Programs

To:

Management of Employer Pension Funds Implementing Sharia-Based Pension Programs;
Acting Management of Financial Institution Pension Funds Implementing Sharia-Based Pension Programs;
Supervisory Board of Pension Funds Implementing Sharia-Based Pension Programs; and
Sharia Supervisory Board of Pension Funds Implementing Sharia-Based Pension Programs,

at your respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 5 /SEOJK.05/2018

REGARDING

THE REPORT ON THE SUPERVISION RESULTS OF THE SHARIA SUPERVISORY BOARD ON PENSION FUNDS IMPLEMENTING PENSION PROGRAMS BASED ON SHARIA PRINCIPLES

In relation to the mandate of Article 25 paragraph (5) of Financial Services Authority Regulation Number 33/POJK.05/2016 concerning the Implementation of Pension Programs Based on Sharia Principles (State Gazette of the Republic of Indonesia Year 2016 Number 187, Supplement to the State Gazette of the Republic of Indonesia Number 5928), it is necessary to regulate provisions regarding the report on the supervision results of the Sharia Supervisory Board on pension funds implementing pension programs based on Sharia principles in this Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS
In this Financial Services Authority Circular Letter, the following terms are meant:

Pension Fund is a legal entity that manages and runs a program promising pension benefits as referred to in Law Number 11 of 1992 concerning Pension Funds.
Pension Program is any program that provides pension benefits for participants as referred to in Law Number 11 of 1992 concerning Pension Funds.
Sharia Principles are Islamic legal provisions based on fatwas and/or Sharia compliance statements from the National Sharia Council of the Indonesian Ulema Council.
Sharia-Based Pension Program, hereinafter referred to as PPBS, is a Pension Program implemented based on Sharia Principles.
Sharia-Based Pension Fund, hereinafter referred to as Sharia Pension Fund, is a Pension Fund whose entire activities are implemented based on Sharia Principles.
Employer Pension Fund, hereinafter abbreviated as DPPK, is a Pension Fund formed by a person or entity that employs employees, as the founder, to implement a defined benefit pension program or a defined contribution pension program, for the benefit of some or all of its employees as participants, and which creates obligations for the employer as referred to in Law Number 11 of 1992 concerning Pension Funds.
Financial Institution Pension Fund, hereinafter abbreviated as DPLK, is a Pension Fund formed by a bank or life insurance company to implement a defined contribution pension program for individuals, both employees and self-employed workers, who are separate from the DPPK for employees of the respective bank or life insurance company as referred to in Law Number 11 of 1992 concerning Pension Funds.
Pension Fund Regulations, hereinafter abbreviated as PDP, are regulations containing provisions that serve as the basis for the implementation of the Pension Program as referred to in Law Number 11 of 1992 concerning Pension Funds.
Sharia Unit is a unit formed by the DPPK to implement PPBS.
Sharia Supervisory Board, hereinafter abbreviated as DPS, is a board responsible for providing advice and suggestions and supervising the fulfillment of Sharia Principles in the implementation of PPBS.
Contract is a legal bond/relationship between a statement of making a bond (ijab) and a statement of accepting a bond (qabul) made between two or more parties, in accordance with Sharia Principles.
Ta'zir Fund is a fund paid by the employer to the Pension Fund implementing PPBS as a consequence of the employer's delay in paying contributions, which is used as a social fund.
Sharia Investment Package is a collection of investment types based on Sharia Principles offered by the DPLK.
Pension Benefit is periodic payments paid to participants at the time and in the manner established in the PDP as referred to in Law Number 11 of 1992 concerning Pension Funds.
Other Benefits are benefit payments other than Pension Benefits that can be made by the Pension Fund and regulated in the PDP.
Sharia Annuity is a series of periodic payments of a predetermined amount during the life of the annuitant or for a certain period, carried out by the manager to the annuitant, implemented based on Sharia Principles.
DPS Supervision Results Report is a supervision results report compiled by the DPS to carry out its main duties and functions as a Sharia supervisor on Pension Funds implementing PPBS.
National Sharia Council of the Indonesian Ulema Council, hereinafter abbreviated as DSN MUI, is an Islamic institution with the duty and function to establish fatwas and supervise their implementation in order to grow and develop business in the fields of finance, business, and the Sharia economy in Indonesia.
Participant is any person who meets the PDP requirements as referred to in Law Number 11 of 1992 concerning Pension Funds.

II. CONTENT AND FORMAT OF THE DPS SUPERVISION RESULTS REPORT
A. Content of the DPS Supervision Results Report

The aspects supervised by the DPS must at least cover:
a. Contracts used; b. contribution management;
c. investment placement;
d. Pension Benefits; e. Other Benefits (if any); and f. other activities.
The systematics of the DPS Supervision Results Report are as follows:
a. General Information
General Information contains:

information regarding the Pension Fund, covering the name of the Pension Fund, type of Pension Fund, PPBS implementation scheme, and address of the Pension Fund;
information regarding the full name of DPS members, positions of DPS members, and information on the DPS appointment decree consisting of the number and date of the decree;
information regarding a summary of correspondence and/or meeting minutes related to the implementation of DPS supervision; and
information regarding the compiler of the report, which contains the name, position, telephone number, and email address of one of the DPS members, who can be contacted in the process of clarification and confirmation regarding the DPS Supervision Results Report.
b. DPS Statement
As a result of the implementation of supervision over Sharia practices in the Pension Fund implementing PPBS, the DPS makes a statement regarding the aspects as referred to in Roman II letter A number 1. There are 2 (two) types of statements that can be given by the DPS, namely:
compliant; in the event that the implementation of PPBS supervised has been in accordance with Sharia Principles; or
not yet compliant; in the event that the implementation of PPBS supervised has not yet been in accordance with Sharia Principles.
c. Summary of Supervision Results and Recommendations
The summary of supervision results and recommendations contains the compliance status and status description regarding the practice of PPBS implementation, namely:
a) compliance status is the DPS opinion containing compliant or not yet compliant; and b) status description contains a brief explanation regarding the management practices that occurred, both compliant and not yet compliant, including situations and conditions that caused such matters. If there are practices of PPBS implementation deemed not yet in accordance with Sharia Principles, the DPS must inform the suggestions, advice, and/or recommendations given to the Pension Fund implementing PPBS in order to prevent, change, and improve the practice of PPBS implementation deemed not yet in accordance with Sharia Principles.
The section on the summary of supervision results and recommendations is presented based on the supervised aspects, namely as follows:
a) Contracts used in the implementation of PPBS, which need to be supervised cover:
(1) the scope of supervision regarding the aspect of contract usage related to the type of contracts used, minimum substance that must be contained in the contract usage documents, and the use of other contracts outside the contracts established in Article 15 paragraph (1) of Financial Services Authority Regulation Number 33/POJK.05/2016 concerning the Implementation of Pension Programs Based on Sharia Principles; and (2) matters that need attention in the assessment of the aspect of contracts used are:
(a) the compliance of contracts used with PPBS activities; (b) the application of systems and procedures for contract usage in PPBS activities; and (c) the determination of fair and transparent ujrah/nisbah in PPBS activities. b) Contribution Management, which needs to be supervised covers:
(1) the scope of supervision regarding the aspect of contribution management of the Pension Program related to the systems and procedures for receiving and managing contributions for the Pension Program in accordance with Sharia Principles, including the imposition of sanctions (ta'zir) in the event of contribution delays and the use of Ta'zir Funds; and (2) matters that need attention in the assessment of the aspect of contribution management of the Pension Program are:
(a) the application of systems and procedures for PPBS membership; (b) the application of systems and procedures for receiving and managing PPBS contributions; and (c) the application of systems and procedures for imposing sanctions (ta'zir) and using Ta'zir Funds. c) Investment Placement, which needs to be supervised covers:
(1) the scope of supervision regarding the aspect of investment placement of the Pension Program related to the systems and procedures for investment placement, proof of ownership of investments, management, and recording of Pension Fund investments; and

(2) matters that need attention in the assessment of the aspect of investment placement are:
(a) the application of systems and procedures for PPBS investment placement; (b) the administration of proof of ownership of PPBS investment assets; (c) the management of PPBS investments in the event that there are PPBS investments that are not in accordance with Sharia Principles; and (d) the recording of PPBS investments. d) Pension Benefits, which need to be supervised covers:
(1) the scope of supervision regarding the aspect of Pension Benefits related to the payment of Pension Benefits, the selection of Sharia Annuity products through Sharia life insurance companies or Sharia Units in insurance companies; and (2) matters that need attention in the assessment of the aspect of Pension Benefits are:
(a) the application of systems and procedures for the payment of Pension Benefits; and (b) the calculation and payment of Pension Benefits have been done in accordance with the promise of the employer, or are already in accordance with the ownership rights of Participants, and do not contradict Sharia Principles. e) Other Benefits (if any) covers:
(1) the scope of supervision regarding the aspect of Other Benefits related to the management of contribution funds for Other Benefits, the investment placement of Other Benefits, the payment mechanism of Other Benefits in accordance with Sharia Principles; and

(2) matters that need attention in the assessment of the aspect of Other Benefits are:
(a) the application of systems and procedures for managing contribution funds for Other Benefits; (b) the application of systems and procedures for investing Other Benefits; (c) the application of systems and procedures for the payment of Other Benefits; and (d) the calculation and payment of Other Benefits have been done in accordance with the promise of the employer, or are already in accordance with the ownership rights of Participants, and do not contradict Sharia Principles and regulations in the field of Pension Funds. f) Other Activities covers:
(1) the scope of supervision regarding other aspects includes the management of other assets related to the types of assets other than investments used as other asset management options, systems and procedures for recording other assets, and all activities carried out by the Pension Fund implementing PPBS other than the aforementioned aspects, which the DPS deems necessary to supervise and report; and (2) matters that need attention in the assessment of the aspect of other activities are:
(a) the application of systems and procedures for placing PPBS assets other than investments; (b) the administration of proof of ownership of other assets; (c) the recording and administration of PPBS Participant accounts; and

(d) the application of other activities not yet regulated in regulations in the field of Pension Funds, including fatwas from DSN MUI. B. Format of the DPS Supervision Results Report The DPS Supervision Results Report is compiled in accordance with the Appendix which is an inseparable part of this Financial Services Authority Circular Letter.

III. PROVISIONS AND PROCEDURES FOR REPORT SUBMISSION
A. Provisions for Report Submission

The DPS must compile the DPS Supervision Results Report regarding the implementation of PPBS for the period from January 1 to December 31.
The DPS Supervision Results Report as referred to in number 1 above is first compiled for the period starting from the date of approval of the PDP in the context of implementing PPBS until December 31.
The Pension Fund must submit the DPS Supervision Results Report as referred to in Roman II, no later than April 30 of the following year.
If April 30 as referred to in number 3 is a holiday, the deadline for submitting the DPS Supervision Results Report is the first working day after that April 30.
B. Procedure for Report Submission
The DPS must submit the DPS Supervision Results Report signed by all DPS members to the Director of Sharia Financial Institutions Business of the Financial Services Authority with the following provisions:
a. a cover letter for the submission of the DPS Supervision Results Report signed by all DPS members in the form of a printed copy (hardcopy); and b. the content of the DPS Supervision Results Report in digital form (softcopy) either in the form of a compact disc, flashdisk, or in other digital forms.

This copy is in accordance with the original
Director of Legal Affairs 1
Legal Department signed
Yuliana
2. Address for submission of the DPS Supervision Results Report:
Director of Sharia Financial Institutions Business Financial Services Authority Wisma Mulia II Building, 15th Floor Jl. Jenderal Gatot Subroto No. 42 Jakarta 12710
3. In the event of a change in the address of the Financial Services Authority office for report submission as referred to in number 2, the Financial Services Authority will convey notification regarding the address change via letter or announcement.

IV. CLOSING
The provisions in this Financial Services Authority Circular Letter shall take effect on the date of determination.

Determined in Jakarta on February 15, 2018
EXECUTIVE HEAD OF SUPERVISOR
FOR INSURANCE, PENSION FUNDS,
LENDING INSTITUTIONS, AND
OTHER FINANCIAL INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI

APPENDIX
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 5 /SEOJK.05/2018 REGARDING THE REPORT ON THE SUPERVISION RESULTS OF THE SHARIA SUPERVISORY BOARD ON PENSION FUNDS IMPLEMENTING PENSION PROGRAMS BASED ON SHARIA PRINCIPLES

TITLE PAGE OF THE DPS SUPERVISION RESULTS REPORT To:
Director of Sharia Financial Institutions Business Financial Services Authority Wisma Mulia II Building, 15th Floor Jl. Jenderal Gatot Subroto No.42 Jakarta 12710

DPS SUPERVISION RESULTS REPORT
Name of Pension Fund :
PPBS Implementation Scheme
: [1] Full Fledged Sharia
[2] Sharia Unit of DPPK
[3] Sharia Investment Package of DPLK
Report Period : to
Report Date :

GENERAL INFORMATION OF THE DPS SUPERVISION RESULTS REPORT GENERAL INFORMATION

Name of Pension Fund :
Type of Pension Fund : (1) DPPK Defined Benefit
(2) DPPK Defined Contribution
(3) DPLK
PPBS Implementation Scheme
: (1) Full Fledged Sharia
(2) Sharia Unit of DPPK
(3) Sharia Investment Package of DPLK
Address of Pension Fund :
Composition of DPS :
No Full Name Position Sharia Supervisory Board Appointment Decree Number Date 1.
etc
Summary of correspondence and/or meeting minutes related to DPS supervision implementation :
No Correspondence and/or meeting minutes Summary of Substance Number Date Matter 1.
etc
Information regarding the report compiler (contact person):
a. Name :
b. Position :
c. Telephone Number :
d. E-mail Address :

DPS STATEMENT
A. IF NO PRACTICES VIOLATING THE PRINCIPLES ARE FOUND STATEMENT OF THE SHARIA SUPERVISORY BOARD In the name of Allah, the Most Gracious, the Most Merciful We have conducted supervision on the implementation of the basic principles of PPBS implementation carried out by the Sharia Pension Fund.../Sharia Unit of DPPK.../Sharia Investment Package of DPLK ... during the period from date .......... to date .........................., as mandated in Article 22 of OJK Regulation Number 33/POJK.05/2016 concerning the Implementation of Pension Programs Based on Sharia Principles. In carrying out this supervision, we carried out an assessment of the implementation of the aforementioned Sharia-Based Pension Program which covers the aspects of contracts used, contribution management, investment placement, Pension Benefits, Other Benefits, and other activities. From the supervision results, no management practices violating Sharia Principles were found. Thus, based on the assessment results of the aspects in paragraph 1 above, in our opinion, the implementation of these matters by the Sharia Pension Fund.../Sharia Unit of DPPK.../Sharia Investment Package of DPLK ... has been in accordance with Sharia Principles. ....................(City Name),...........................(date-month-year) Sharia Supervisory Board No Name Position Signature

B. IF PRACTICES NOT YET IN ACCORDANCE WITH SHARIA PRINCIPLES ARE FOUND STATEMENT OF THE SHARIA SUPERVISORY BOARD In the name of Allah, the Most Gracious, the Most Merciful We have conducted supervision on the implementation of the basic principles of PPBS implementation carried out by the Sharia Pension Fund.../Sharia Unit of DPPK.../Sharia Investment Package of DPLK ... during the period from date .......... to date ....................., as mandated in Article 22 of OJK Regulation Number 33/POJK.05/2016 concerning the Implementation of Pension Programs Based on Sharia Principles. In carrying out this supervision, we carried out an assessment of the implementation of the aforementioned Sharia-Based Pension Program which covers the aspects of contracts used, contribution management, investment placement, Pension Benefits, Other Benefits, and other activities. From the supervision results, it is known that the Sharia Pension Fund.../Sharia Unit of DPPK.../Sharia Investment Package of DPLK... has carried out management practices not yet in accordance with Sharia Principles. Thus, based on the assessment results of the aspects in paragraph 1 above, in our opinion, the implementation of these matters by the Sharia Pension Fund.../Sharia Unit of DPPK.../Sharia Investment Package of DPLK... has not yet been in accordance with Sharia Principles. Summary of Practices Not Yet in Accordance with Sharia Principles No. Practice Period of Occurrence Cause Factor Description ....................(City Name),...........................(date-month-year) Sharia Supervisory Board No Name Position Signature

SUMMARY OF SUPERVISION RESULTS AND RECOMMENDATIONS Summary of Supervision Results and Recommendations Based on the supervision and assessment results of our implementation of Sharia Principles in the operational implementation of PPBS on the Sharia Pension Fund.../Sharia Unit of DPPK.../Sharia Investment Package of DPLK... during the period from date...................to..............., the summary of supervision results and recommendations can be conveyed as follows:
A. Contracts Used
Main Material 1:
Compliance of contracts used with
PPBS activities
Compliance Status:
Status Description:
Recommendation:
Main Material 2:
Application of systems and procedures for contract usage in PPBS activities Compliance Status:
Status Description:
Recommendation:
Main Material 3:
Determination of fair and transparent ujrah/nisbah in PPBS activities Compliance Status:
Status Description:
Recommendation:

B. Contribution Management
Main Material 1:
Application of systems and procedures for PPBS membership Compliance Status:
Status Description:
Recommendation:
Main Material 2:
Application of systems and procedures for receiving and managing PPBS contributions Compliance Status:
Status Description:
Recommendation:
Main Material 3:
Application of systems and procedures for imposing sanctions (ta'zir) and using Ta'zir Funds Compliance Status:
Status Description:
Recommendation:

C. Investment Placement
Main Material 1:
Application of systems and procedures for PPBS investment placement Compliance Status:
Status Description:
Recommendation:
Main Material 2:
Administration of proof of ownership of PPBS investment assets Compliance Status:
Status Description:
Recommendation:
Main Material 3:
Management of PPBS investments in the event that there are PPBS investments that are not in accordance with Sharia Principles Compliance Status:
Status Description:
Recommendation:
Main Material 4:
Recording of PPBS investments
Compliance Status:
Status Description:
Recommendation:

D. Pension Benefits
Main Material 1:
Application of systems and procedures for the payment of Pension Benefits Compliance Status:
Status Description:
Recommendation
Main Material 2 :
Calculation and payment of Pension
Benefits have been done in accordance with the promise of the employer, or are already in accordance with the ownership rights of Participants, and do not contradict Sharia Principles. Compliance Status:
Status Description:
Recommendation
E. Other Benefits (if any)
Main Material 1:
Application of systems and procedures for managing contribution funds for Other Benefits Compliance Status:
Status Description:
Recommendation:
Main Material 2:
Application of systems and procedures for investing Other Benefits Compliance Status:
Status Description:
Recommendation:

Main Material 3:
Application of systems and procedures for the payment of Other Benefits Compliance Status:
Status Description:
Recommendation:
Main Material 4:
Calculation and payment of Other Benefits have been done in accordance with the promise of the employer, or are already in accordance with the ownership rights of Participants, and do not contradict Sharia Principles and regulations in the field of Pension Funds Compliance Status:
Status Description:
Recommendation
F. Other Activities
Main Material 1:
Application of systems and procedures for placing PPBS assets other than investments Compliance Status:
Status Description:
Recommendation:
Main Material 2:
Administration of proof of ownership of other assets Compliance Status:
Status Description:
Recommendation:

This copy is in accordance with the original
Director of Legal Affairs 1
Legal Department signed
Yuliana
Main Material 3:
Recording and administration of PPBS Participant accounts Compliance Status:
Status Description:
Recommendation:
Main Material 4:
Application of other activities not yet regulated in regulations in the field of Pension Funds, including fatwas from DSN MUI Compliance Status:
Status Description:
Recommendation:
Determined in Jakarta on February 15, 2018
EXECUTIVE HEAD OF SUPERVISOR
FOR INSURANCE, PENSION FUNDS,
LENDING INSTITUTIONS, AND
OTHER FINANCIAL INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI

Circular Letter of the Financial Services Authority Number 5/SEOJK.05/2018 Regarding the Report on the Supervision Results of the Sharia Supervisory Board on Pension Funds Implementing Sharia-Based Pension Programs

Lineage: In force