Financial Services Authority Regulation Number 15/POJK.05/2019 Concerning Pension Fund Governance

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 15 /POJK.05/2019
CONCERNING
PENSION FUND GOVERNANCE
BY THE GRACE OF GOD THE ALMIGHTY
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering: a. that to achieve effective and efficient pension fund management, the application of comprehensive governance for pension funds is required; b. that to balance the growth of the pension fund industry, pension fund assets need to be managed carefully;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Pension Fund Governance;

Recalling: 1. Law Number 11 of 1992 concerning Pension Funds (State Gazette of the Republic of Indonesia Year 1992 Number 37, Supplement to the State Gazette of the Republic of Indonesia Number 3477);
2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

3. Government Regulation Number 76 of 1992 concerning Employer Pension Funds (State Gazette of the Republic of Indonesia Year 1992 Number 126, Supplement to the State Gazette of the Republic of Indonesia Number 3507);
4. Government Regulation Number 77 of 1992 concerning Financial Institution Pension Funds (State Gazette of the Republic of Indonesia Year 1992 Number 127, Supplement to the State Gazette of the Republic of Indonesia Number 3508);

DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING PENSION FUND GOVERNANCE.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined:

1. Pension Fund is a legal entity that manages and runs a program promising pension benefits, including Pension Funds that carry out all or part of their business using Sharia principles.
2. Good Governance for Pension Funds, hereinafter referred to as Pension Fund Governance, is a process and structure used by Pension Funds to achieve pension fund management objectives by applying principles of transparency, accountability, responsibility, independence, and fairness.
3. Pension Fund Governance Guidelines are guidelines used as the basis for the application of Pension Fund Governance.
4. Employer Pension Fund, hereinafter abbreviated as DPPK, is a Pension Fund established by a person or entity that employs employees, as the founder, to carry out 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.
5. Financial Institution Pension Fund, hereinafter abbreviated as DPLK, is a Pension Fund established by a bank or life insurance company to carry out a defined contribution pension program for individuals, both employees and self-employed workers, separate from the DPPK for employees of the respective bank or life insurance company.
6. Pension Fund Regulations, hereinafter abbreviated as PDP, are regulations containing provisions that serve as the basis for the implementation of the pension program.
7. Pension Program is any program that seeks to provide pension benefits for participants.
8. Employer is the founder or co-founder who employs employees.
9. Founder is:
   a. a person or entity that establishes a DPPK; or b. a bank or life insurance company that establishes a DPLK.
10. Co-Founder is an Employer that participates in a DPPK Founder, for the benefit of some or all of its employees.
11. Participant is any person who meets the requirements of the PDP.
12. Management is the management of the Pension Fund.
13. Acting Management is an official from the DPLK Founder who is tasked with carrying out the operational activities of the DPLK.
14. Board of Supervisors is the supervisory board of the Pension Fund.
15. 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 the Pension Program based on Sharia principles.

CHAPTER II
APPLICATION OF PENSION FUND GOVERNANCE
Article 2
(1) Pension Funds are required to apply Pension Fund Governance principles in all their business activities at all levels or tiers of the organization.
(2) In applying Pension Fund Governance principles as referred to in paragraph (1), Pension Funds are required to have Pension Fund Governance Guidelines. (3) The implementation of the Pension Fund Governance Guidelines as referred to in paragraph (2) is at least manifested in:
a. the implementation of duties and responsibilities of the DPPK Management, Acting Management, Board of Supervisors, and DPS; b. the implementation of duties and functions of the Pension Fund's internal control;
c. the application of compliance, internal audit, and external audit functions;
d. the application of risk management, including internal control systems and the application of information technology governance; e. the application of remuneration policies; f. the Pension Fund's business plan; and g. transparency of the Pension Fund's financial and non-financial conditions. (4) The Pension Fund Governance Guidelines as referred to in paragraph (3) are drafted by the DPPK Management or Acting Management and established by the Founder.

Article 3
The application of Pension Fund Governance aims to:
a. optimize the value of the Pension Fund for stakeholders, specifically Participants and/or parties entitled to benefits; b. improve the management of Pension Funds professionally, effectively, and efficiently;
c. increase the compliance of the Pension Fund committee and its subordinate levels so that in making decisions and taking actions, they are grounded in high ethics, compliance with statutory regulations, and awareness of the Pension Fund's social responsibility to stakeholders and environmental sustainability;
d. realize a healthier, reliable, trustworthy, and competitive Pension Fund; and e. increase the contribution of Pension Funds to the national economy.

Article 4
Founders, Employers, Co-Founders, Boards of Supervisors, DPS, DPPK Management, Acting Management, and other parties related to the Pension Fund are responsible for the application of Pension Fund Governance according to their functions and duties.

CHAPTER III
FOUNDERS AND CO-FOUNDERS
Article 5
(1) The Founder is fully responsible for the implementation of the Pension Fund.
(2) Founders and Co-Founders are required to support the application of Pension Fund Governance in the Pension Fund.
(3) Founders and Co-Founders are required to carry out their respective duties and responsibilities as regulated in the PDP and statutory regulations concerning Pension Funds. (4) Founders and Co-Founders are required to follow up on audit findings and recommendations from units performing the Pension Fund's internal audit function, external audit function, and/or the results of supervision by the Financial Services Authority.

CHAPTER IV
MANAGEMENT AND ACTING MANAGEMENT
First Section
Number, Composition, Criteria, and Independence of Management in DPPK
Article 6
(1) DPPK is required to have at least 2 (two) Management members.
(2) DPPK may have more than 2 (two) Management members adjusted to the complexity of the DPPK while still considering effectiveness in decision-making.
(3) All Management members as referred to in paragraph (1) must reside within the territory of the Republic of Indonesia.
(4) At least half of the number of Management members must have knowledge or experience in the field of investment or risk management.
(5) DPPK is required to have a Management member who oversees the compliance function.
(6) The Management member overseeing the compliance function as referred to in paragraph (5) is prohibited from holding a concurrent position with the Management member overseeing the funding function, financial function, or investment function. (7) In the event that the number of Management members is 2 (two), the compliance function as referred to in paragraph (5) may be held concurrently by the Management member overseeing the financial function. (8) All Management members must have knowledge relevant to their positions. (9) For follow-up on supervision results, the Financial Services Authority may request the DPPK to adjust the number of Management members.

Article 7
DPPK Management members are required to meet the following criteria:
a. meet the fit and proper test requirements in accordance with Financial Services Authority Regulations concerning the fit and proper test for key parties of financial service institutions; b. be able to act with good faith, honesty, and professionalism;
c. be able to act in the interest of the DPPK, Participants, and/or parties entitled to benefits;
d. prioritize the interests of the DPPK, Participants, and/or parties entitled to benefits over personal interests; e. be able to make decisions based on independent and objective assessments for the interest of the DPPK, Participants, and/or parties entitled to benefits; and f. be able to avoid the abuse of their authority to obtain undue personal gain or cause losses to the DPPK.

Article 8
A majority of DPPK Management members are prohibited from having family relationships up to the second degree with fellow Management members and/or the Board of Supervisors in the same DPPK.

Second Section
Number, Composition, Criteria, and Independence of Acting Management in DPLK
Article 9
(1) The DPLK Founder acts as the Management.
(2) In the management of the DPLK, the DPLK Founder is required to appoint Acting Management.
(3) The Acting Management appointed by the DPLK Founder is required to manage all aspects of the DPLK.

Article 10
(1) DPLK is required to have at least 2 (two) Acting Management members.
(2) DPLK may have more than 2 (two) Acting Management members adjusted to the complexity of the DPLK while still considering effectiveness in decision-making. (3) All Acting Management members as referred to in paragraph (1) must reside within the territory of the Republic of Indonesia. (4) At least half of the number of Acting Management members must have knowledge or experience in the field of investment or risk management. (5) The Acting Management member overseeing the compliance function is prohibited from holding a concurrent position with the Acting Management member overseeing the funding function, financial function, or investment function. (6) In the event that the number of Acting Management members is 2 (two), the compliance function as referred to in paragraph (5) may be held concurrently by the Acting Management member overseeing the financial function. (7) All Acting Management members must have knowledge relevant to their positions. (8) For follow-up on supervision results, the Financial Services Authority may request the DPLK to adjust the number of Acting Management members.

Article 11
Acting Management members are required to meet the following criteria:
a. meet the fit and proper test requirements in accordance with Financial Services Authority Regulations concerning the fit and proper test for key parties of financial service institutions; b. be able to act with good faith, honesty, and professionalism;
c. be able to act in the interest of the DPLK, Participants, and/or parties entitled to benefits;
d. prioritize the interests of the DPLK, Participants, and/or parties entitled to benefits over personal interests; e. be able to make decisions based on independent and objective assessments for the interest of the DPLK, Participants, and/or parties entitled to benefits; and f. be able to avoid the abuse of their authority to obtain undue personal gain or cause losses to the DPLK.

Article 12
A majority of Acting Management members are prohibited from having family relationships up to the second degree with fellow Acting Management members and/or the Board of Supervisors in the same DPLK.

Third Section
Duties and Responsibilities of DPPK Management or Acting Management
Article 13
DPPK Management or Acting Management is required to carry out the following duties and responsibilities:
a. be fully responsible for the management of the Pension Fund; b. apply Pension Fund Governance;
c. carry out the duties and responsibilities of DPPK Management or Acting Management as regulated in the PDP and statutory regulations concerning Pension Funds;
d. follow up on audit findings and recommendations from units performing the Pension Fund's internal audit function, external audit function, and/or the results of supervision by the Financial Services Authority; e. ensure effective, accurate, and timely decision-making and be able to act independently, without interests that could hinder their ability to carry out duties independently, objectively, and critically; f. ensure that the functions and duties of each unit within the Pension Fund are clear so that each party can carry out their functions and duties well; g. be accountable for the implementation of their duties to the Founder; h. ensure that the Pension Fund considers the interests of all parties, specifically Participants and/or parties entitled to benefits; and
i. ensure that information regarding the Pension Fund is provided to the Board of Supervisors and DPS in a timely and complete manner.

Article 14
DPPK Management members or Acting Management members are prohibited from:
a. conducting transactions that have a conflict of interest with the activities of the Pension Fund where the DPPK Management or Acting Management member serves; b. utilizing the Pension Fund for personal, family, and/or third-party interests that can harm the Pension Fund; and
c. taking and/or receiving personal benefits from the Pension Fund where the DPPK Management or Acting Management member serves, other than remuneration and established facilities.

Article 15
In addition to the duties and responsibilities as referred to in Article 13, Acting Management also has the following duties and responsibilities:
a. ensure that Participants are given choices regarding investment packages or types suitable for them; b. ensure that Participants receive information regarding the potential for investment losses arising from the investment packages or types chosen by Participants through the Pension Fund;
c. ensure that the performance of investment packages or types is well monitored;
d. ensure that costs charged to Participants are disclosed in detail; and e. ensure that Participants are offered assistance in choosing investment packages or types.

Article 16
(1) DPPK Management members or Acting Management members are prohibited from holding concurrent positions as:
a. DPPK Management, Acting Management, Board of Supervisors, or DPS in another Pension Fund; b. Board of Supervisors or DPS in the same Pension Fund; or
c. directors, board of commissioners, or equivalent positions, or other officials, in other companies and/or institutions.
(2) The prohibition on concurrent positions as referred to in paragraph (1) letter c does not include:
a. directors of banks or life insurance companies who serve as Acting Management; b. DPPK Management or Acting Management members responsible for supervising the Pension Fund's participation in subsidiaries, performing functional duties as members of the board of commissioners in subsidiaries controlled by the Pension Fund, provided that this does not cause the individual to neglect the implementation of duties and responsibilities as DPPK Management or Acting Management; and
c. DPPK Management members holding positions other than director, board of commissioner, or equivalent at the Employer.

Fourth Section
Meetings of DPPK Management or Acting Management
Article 17
Every strategic policy and decision must be decided through a meeting of DPPK Management or Acting Management, taking into account supervision according to the duties and responsibilities of the Board of Supervisors.

Article 18
(1) DPPK Management or Acting Management is required to hold regular meetings of DPPK Management or Acting Management at least once (1) in one (1) month.
(2) The results of the meetings of DPPK Management or Acting Management as referred to in paragraph (1) must be recorded in the minutes of the meeting of DPPK Management or Acting Management and documented properly. (3) Differences of opinion occurring in the decisions of the meetings of DPPK Management or Acting Management must be clearly stated in the minutes of the meeting of DPPK Management or Acting Management, accompanied by the reasons for the difference of opinion. (4) DPPK Management or Acting Management members who are present or absent in the meetings of DPPK Management or Acting Management have the right to receive copies of the minutes of the meeting of DPPK Management or Acting Management. (5) The number of meetings of DPPK Management or Acting Management held and the attendance of each DPPK Management or Acting Management member must be included in the report on the application of Pension Fund Governance.

CHAPTER V
BOARD OF SUPERVISORS
First Section
Number, Composition, Criteria, and Independence of the Board of Supervisors in DPPK
Article 19
(1) The Board of Supervisors of DPPK is required to have at least 2 (two) Board of Supervisors members consisting of representatives of Employers and representatives of Participants in equal numbers. (2) Board of Supervisors members from Participant representatives as referred to in paragraph (1) must be established by the Founder based on proposals from Participants. (3) Board of Supervisors members from Participant representatives as referred to in paragraph (1) must come from active Participants in the DPPK. (4) In the event that Board of Supervisors members of the DPPK representing Participants as referred to in paragraph (2) are more than 1 (one) person and the number of retirees is more than 50 (fifty) people, at least 1 (one) Board of Supervisors member of the DPPK representing Participants must be a retiree who still receives periodic pension benefits. (5) The mechanism for submitting proposals from Participants and the establishment by the Founder of Board of Supervisors members from Participant representatives as referred to in paragraph (2) is established in the Pension Fund Governance Guidelines as referred to in Article 2 paragraph (2). (6) Board of Supervisors members from Participant representatives as referred to in paragraph (1) must be able to act on behalf of Participant interests. (7) DPPK is required to communicate the appointment of Board of Supervisors members from Participant representatives as referred to in paragraph (1) to all Participants. (8) At least half of the number of Board of Supervisors members of DPPK as referred to in paragraph (1) must reside within the territory of the Republic of Indonesia. (9) All Board of Supervisors members of DPPK must have knowledge relevant to their positions.

Article 20
Board of Supervisors members of DPPK are required to meet the following criteria:
a. meet the fit and proper test requirements in accordance with Financial Services Authority Regulations concerning the fit and proper test for key parties of financial service institutions; b. be able to act with good faith, honesty, and professionalism;
c. be able to act in the interest of the DPPK, Participants, and/or parties entitled to benefits;
d. prioritize the interests of the DPPK, Participants, and/or parties entitled to benefits over personal interests; e. be able to make decisions based on independent and objective assessments for the interest of the DPPK, Participants, and/or parties entitled to benefits; and f. be able to avoid the abuse of their authority to obtain undue personal gain or cause losses to the DPPK.

Article 21
A majority of Board of Supervisors members of DPPK are prohibited from having family relationships up to the second degree with fellow Board of Supervisors members and/or Management in the same DPPK.

Article 22
Former DPPK Management members must serve a waiting period of at least 6 (six) months before becoming Participant representative Board of Supervisors members in the same DPPK.

Second Section
Duties and Responsibilities of the Board of Supervisors in DPPK
Article 23
The Board of Supervisors of DPPK is required to:
a. be fully responsible for the supervision of DPPK; b. monitor the effectiveness of the application of Pension Fund Governance;
c. ensure that the Pension Fund's internal control has been implemented well;
d. carry out the duties and responsibilities of the Board of Supervisors as regulated in the PDP and statutory regulations concerning Pension Funds independently; e. ensure that DPPK Management has followed up on audit findings and recommendations from units performing the DPPK's internal audit function, external audit function, and/or the results of supervision by the Financial Services Authority; f. ensure that internal and external audits have been implemented in accordance with applicable audit standards; g. follow up on audit findings and recommendations from units performing the DPPK's internal audit function, external audit function, and/or the results of supervision by the Financial Services Authority; h. ensure effective, accurate, and timely decision-making and be able to act independently, without interests that could hinder their ability to carry out duties independently, objectively, and critically;
i. supervise DPPK Management in maintaining the balance of interests of all parties, specifically Participant interests and/or parties entitled to benefits;
j. ensure that DPPK has a code of ethics as a guide for ethical behavior for the Board of Supervisors, DPS, Management, and all employees; and k. compile a report on the results of the Board of Supervisors' supervision regarding the application of Pension Fund Governance, which is part of the report on the application of Pension Fund Governance.

Article 24
The Board of Supervisors of DPPK has the right to obtain complete and timely information from DPPK Management regarding the DPPK.

Article 25
Board of Supervisors members of DPPK are prohibited from:
a. conducting transactions that have a conflict of interest with the activities of the Pension Fund where the Board of Supervisors of DPPK serves; b. utilizing the DPPK for personal, family, and/or third-party interests that can harm the DPPK;
c. taking and/or receiving personal benefits from the DPPK where the Board of Supervisors of DPPK serves, other than remuneration and established facilities; and
d. interfering in the operational activities of the DPPK that are the responsibility of DPPK Management.

Article 26
(1) Board of Supervisors members of DPPK are prohibited from holding concurrent positions as:
a. Management or DPS in the same DPPK; or b. Board of Supervisors, Management, or DPS in another DPPK.
(2) The prohibition on concurrent positions as referred to in paragraph (1) letter b does not apply in the event that the Founder of the DPPK where the Board of Supervisors serves is part of the same group or financial conglomerate.

Third Section
Meetings of the Board of Supervisors in DPPK
Article 27
(1) The Board of Supervisors of DPPK is required to hold regular Board of Supervisors meetings at least once (1) in 3 (three) months.
(2) The Board of Supervisors of DPPK is required to hold Board of Supervisors meetings by inviting DPPK Management at least once (1) in 3 (three) months.

(3) Members of the DPPK Supervisory Board are required to attend Supervisory Board meetings as referred to in paragraph (1) and paragraph (2) for at least 75% (seventy-five percent) of the total number of Supervisory Board meetings within a 1 (one) year period.

(4) The results of the DPPK Supervisory Board meetings as referred to in paragraph (1) and paragraph (2) must be recorded in the minutes of the Supervisory Board meetings and documented properly.

(5) Differences of opinion occurring in the decisions of the DPPK Supervisory Board meetings as referred to in paragraph (1) and paragraph (2) must be clearly stated in the minutes of the Supervisory Board meetings, accompanied by the reasons for such differences of opinion.

(6) Members of the DPPK Supervisory Board, whether present or absent from the Supervisory Board meetings as referred to in paragraph (1) and paragraph (2), are entitled to receive copies of the minutes of the Supervisory Board meetings.

(7) The number of DPPK Supervisory Board meetings held and the attendance of each member of the Supervisory Board must be included in the report on the application of Pension Fund Governance.

Fourth Section
DPLK Supervisory Board

Article 28

(1) The Board of Commissioners or its equivalent of the DPLK Founder acts as the DPLK Supervisory Board in accordance with the provisions of legislation regarding Pension Funds.

(2) The DPLK Supervisory Board is required to:
a. take full responsibility for the supervision of the DPLK; b. monitor the effectiveness of the application of Pension Fund Governance;
c. ensure that the internal control structure of the Pension Fund has been implemented properly;
d. carry out the duties and responsibilities of the Supervisory Board as regulated in the DPPK and provisions of legislation in the field of Pension Funds independently; e. ensure that internal and external audits have been carried out in accordance with applicable audit standards; f. ensure that follow-up on audit findings is carried out by management; g. supervise the Acting Manager in maintaining the balance of interests of all parties, particularly the interests of Participants and/or parties entitled to benefits; h. ensure that the DPLK has a code of ethics as a guide for ethical behavior for the Supervisory Board, DPS, Acting Manager, and all employees;
i. formulate and apply DPLK supervision mechanisms; and
j. formulate reports on the results of the Supervisory Board's supervision regarding the application of Pension Fund Governance, which is part of the report on the application of Pension Fund Governance.

Article 29
The DPLK Supervisory Board is entitled to obtain information from the Acting Manager regarding the DPLK completely and in a timely manner.

Article 30

(1) The DPLK Supervisory Board may form committees that function to assist the DPLK Supervisory Board in carrying out its duties.

(2) The committees as referred to in paragraph (1) consist of members who have knowledge relevant to their assignments.

(3) The formation of committees as referred to in paragraph (1) is determined in the decision of the DPLK Supervisory Board.

(4) The term of office of committee members as referred to in paragraph (2) must not be longer than the term of office of the DPLK Supervisory Board.

(5) The committees as referred to in paragraph (1) are responsible to the DPLK Supervisory Board.

CHAPTER VI
SHARIA SUPERVISORY BOARD

First Section
Number, Composition, Criteria, and Independence of DPS

Article 31

(1) Pension Funds that implement Pension Programs based on Sharia principles must have a DPS.

(2) The DPS as referred to in paragraph (1) consists of Sharia experts appointed by the Founder based on recommendations from the National Sharia Board of the Indonesian Ulema Council.

(3) The appointment of the DPS as referred to in paragraph (2) must be clearly stated in the Founder's decision letter.

(4) At least half of the number of DPS members must reside within the territory of the Republic of Indonesia.

Article 32
DPS members must meet the following criteria:
a. meet the assessment requirements for competence and propriety in accordance with Financial Services Authority Regulations regarding the assessment of competence and propriety for key parties of financial service institutions; b. be able to act in good faith, honestly, and professionally;
c. be able to act in the interests of the Pension Fund, Participants, and/or parties entitled to benefits;
d. prioritize the interests of the Pension Fund, Participants, and/or parties entitled to benefits over personal interests; e. be able to make decisions based on independent and objective assessments for the interests of the Pension Fund, Participants, and/or parties entitled to benefits; and f. be able to avoid the abuse of authority to obtain improper personal benefits or cause losses to the Pension Fund.

Article 33
In the event that the number of DPS members is more than 1 (one), a majority of DPS members are prohibited from having family relationships up to the second degree with other DPS members, the Supervisory Board, DPPK Managers, and Acting Managers within the same Pension Fund.

Second Section
Duties and Responsibilities of DPS

Article 34
The DPS is required to:
a. carry out the duties and responsibilities of the DPS as regulated in the DPPK and provisions of legislation in the field of Pension Funds; b. carry out supervision duties and provide advice and suggestions to the DPPK Manager and Acting Manager so that business activities are in accordance with Sharia principles;
c. follow up on audit findings and recommendations from units performing the internal audit function of the Pension Fund, external audit function, and/or the results of supervision by the Financial Services Authority; and
d. report violations related to the application of Sharia principles in the Pension Fund being supervised to the DPPK Manager and/or Acting Manager.

Article 35
The DPS is entitled to obtain information from the DPPK Manager and Acting Manager regarding the Pension Fund implementing Pension Programs based on Sharia principles completely and in a timely manner.

Article 36
DPS members are prohibited from:
a. conducting transactions that have conflicts of interest with the activities of the Pension Fund where the DPS member serves; b. utilizing the Pension Fund for personal, family, and/or other interests that can harm the Pension Fund; and
c. taking and/or receiving personal benefits from the Pension Fund where the DPS member serves, other than remuneration and facilities established.

Article 37

(1) DPS members are prohibited from holding concurrent positions as DPPK Managers, Acting Managers, or members of the Supervisory Board within the same Pension Fund.

(2) DPS members are prohibited from holding concurrent positions as DPS members in more than 4 (four) other Sharia financial service institutions.

Third Section
DPS Meetings

Article 38

(1) The DPS is required to hold DPS meetings periodically at least 1 (one) time every 3 (three) months.

(2) The results of DPS meetings as referred to in paragraph (1) must be recorded in the minutes of the DPS meetings and documented properly.

(3) Differences of opinion occurring in DPS meeting decisions must be clearly stated in the minutes of the DPS meetings, accompanied by the reasons for such differences of opinion.

(4) DPS members, whether present or absent from DPS meetings, are entitled to receive copies of the minutes of the DPS meetings.

(5) The number of DPS meetings held and the attendance of each DPS member must be included in the report on the application of Pension Fund Governance.

(6) In the event that the number of DPS members is 1 (one), DPS meetings as referred to in paragraph (1) are conducted together with meetings of the Supervisory Board as referred to in Article 27 on DPPK or meetings of the Acting Manager as referred to in Article 18 on DPLK.

CHAPTER VII
FUNCTIONS AND COMMITTEES

Article 39

(1) In applying the principles of Pension Fund Governance as referred to in Article 2 paragraph (1), Pension Funds are required to establish functions:
a. internal audit; b. risk management; and
c. compliance.

(2) The establishment of functions as referred to in paragraph (1):
a. for DPPK is carried out by the Management; or b. for DPLK is carried out by the Acting Manager or combined with functions existing in the DPLK Founder.

(3) The functions as referred to in paragraph (1) are carried out by different persons in charge for each function and can be carried out by 1 (one) or more units.

(4) In the event that Pension Funds use third-party services for the implementation of all Pension Fund activities, Pension Funds must ensure that the functions as referred to in paragraph (1) are carried out by third parties designated by the Pension Fund.

Article 40

(1) The internal audit function as referred to in Article 39 paragraph (1) letter a is responsible for detailing the operational planning, implementation, and monitoring of audit results.

(2) The risk management function as referred to in Article 39 paragraph (1) letter b is responsible for ensuring the application of risk management in all business activities at all levels or tiers of the organization.

(3) The compliance function as referred to in Article 39 paragraph (1) letter c is responsible for ensuring that all Pension Fund activities comply with provisions of legislation, including Sharia principles for Pension Funds implementing Pension Programs with Sharia principles, and managing compliance risks.

(4) The functions as referred to in Article 39 are responsible to the DPPK Management or Acting Manager who oversees the compliance function.

Article 41

(1) To support the effectiveness of the implementation of duties and responsibilities, the Supervisory Board may form the following committees:
a. audit committee; b. risk monitoring committee; and
c. nomination and remuneration committee.

(2) Pension Funds with net assets greater than IDR 500,000,000,000.00 (five hundred billion rupiah) must have the committees as referred to in paragraph (1) letter b.

Article 42

(1) The audit committee as referred to in Article 41 paragraph (1) letter a functions as a facilitator for the Supervisory Board to ensure that:
a. the internal control structure of the Pension Fund has been implemented properly; b. internal and external audits have been carried out in accordance with applicable audit standards; and
c. follow-up on audit findings is carried out by management.

(2) The audit committee as referred to in Article 41 paragraph (1) letter a consists of at least 1 (one) member of the Supervisory Board representing Participants and at least 1 (one) other party outside the Pension Fund who has no financial, managerial, and/or family relationships with the Supervisory Board, DPPK Management, Acting Manager, and/or Founder, or other relationships that may influence their ability to act independently.

(3) In the event that the audit committee as referred to in Article 41 paragraph (1) letter a is not formed, the Supervisory Board must carry out the duties of the audit committee as referred to in paragraph (1).

Article 43

(1) The risk monitoring committee as referred to in Article 41 paragraph (1) letter b functions to assist the Supervisory Board in monitoring the implementation of risk management formulated by the DPPK Management or Acting Manager and assessing the risk tolerance that can be taken by the Pension Fund.

(2) The risk monitoring committee as referred to in Article 41 paragraph (1) letter b consists of at least 2 (two) committee members.

(3) Members of the risk monitoring committee as referred to in paragraph (2) must have experience in the field of risk monitoring.

(4) Members of the risk monitoring committee as referred to in paragraph (2) in DPPK must consist of at least one member of the Supervisory Board representing Participants and another party.

(5) In the event that the risk monitoring committee as referred to in Article 41 paragraph (1) letter b is not formed, the Supervisory Board carries out the duties of the risk monitoring committee as referred to in paragraph (1).

Article 44

(1) The nomination and remuneration committee as referred to in Article 41 paragraph (1) letter c functions as:
a. a facilitator for the Supervisory Board in assisting the Founder to establish criteria and select candidates for the Supervisory Board and DPPK Management or Acting Manager; and b. a facilitator for the Supervisory Board in assisting the Founder to establish remuneration systems.

(2) The nomination and remuneration committee consists of one member of the Supervisory Board and another party.

(3) In the event that the nomination and remuneration committee as referred to in Article 41 paragraph (1) letter c is not formed, the Supervisory Board carries out the duties of the nomination and remuneration committee as referred to in paragraph (1).

CHAPTER VIII
EXTERNAL AUDITORS AND ACTUARIES

Article 45

(1) External auditors of Pension Funds must be appointed by the Supervisory Board from candidates for external auditors proposed by the audit committee or the Supervisory Board carrying out the audit committee function.

(2) The proposal of candidates for external auditors as referred to in paragraph (1) must be accompanied by:
a. reasons for the nomination and the amount of remuneration or service fees proposed for such external auditors; and b. a statement of willingness signed by the external auditor, to be free from the influence of DPPK Management or Acting Managers, the Supervisory Board, DPS, and interested parties in the Pension Fund, and willingness to provide information regarding audit results to the Financial Services Authority.

(3) Pension Funds must provide all accounting records and supporting data required by external auditors in conducting audits of Pension Fund financial reports.

Article 46

(1) Actuaries whose services will be used to fulfill provisions of legislation in the field of Pension Funds must be appointed by the Supervisory Board from candidates for actuaries proposed by the DPPK Management or Acting Manager.

(2) The proposal of candidates for actuaries as referred to in paragraph (1) must be accompanied by:
a. reasons for the nomination and the amount of remuneration or service fees proposed for such actuaries; and b. a statement of willingness signed by the actuary, to use applicable actuarial practice standards in Indonesia and willingness to provide information regarding valuation results to the Financial Services Authority.

(3) Pension Funds must provide all supporting data required by actuaries in conducting actuarial valuations.

CHAPTER IX
REMUNERATION PRACTICES AND POLICIES

Article 47

(1) Founders must have remuneration policies for members of DPPK Management, Acting Managers, the Supervisory Board, and DPS that encourage prudent behavior aligned with the long-term interests of Pension Funds and fair treatment of Participants and/or parties entitled to benefits.

(2) Pension Funds must have remuneration policies for employees that encourage prudent behavior aligned with the long-term interests of Pension Funds and fair treatment of Participants and/or related parties entitled to benefits.

(3) Pension Funds must apply remuneration policies as referred to in paragraph (1) and paragraph (2).

(4) Remuneration policies as referred to in paragraph (1) and paragraph (2) must consider at least:
a. financial performance and fulfillment of Pension Fund obligations as regulated in provisions of legislation; b. individual performance;
c. fairness with peer groups; and
d. considerations of long-term targets and strategies of Pension Funds.

CHAPTER X
INVESTMENT GOVERNANCE

Article 48

(1) In conducting investment management, Pension Funds must apply prudent principles, prioritizing the interests of Participants and/or parties entitled to benefits.

(2) In applying prudent principles as referred to in paragraph (1), DPPK Management or Acting Managers must formulate and apply Pension Fund investment guidelines.

(3) Pension Fund investment guidelines as referred to in paragraph (2) must contain at least:
a. authority, authorization, and responsibilities of DPPK Management, Acting Managers, and Pension Fund employees; b. analysis processes for investment placement and divestment;
c. adequate evaluation of investment management; and
d. investment risk management.

CHAPTER XI
INFORMATION TECHNOLOGY GOVERNANCE

Article 49

(1) Pension Funds must apply effective information technology governance.

(2) Information technology governance as referred to in paragraph (1) must contain at least:
a. information system organizational structure; b. information system usage guidelines equipped with instructions or work orders for each function (standard operating procedure); and
c. data security management guidelines and incident management guidelines (disaster recovery plan).

CHAPTER XII
RISK MANAGEMENT AND INTERNAL CONTROLS

Article 50

(1) Pension Funds must apply risk management by effectively identifying, assessing, and monitoring business risks.

(2) Risk management as referred to in paragraph (1) must be adjusted to the objectives, business policies, size, and complexity of business, as well as the capabilities of Pension Funds.

(3) Provisions regarding risk management as referred to in paragraph (1) refer to Financial Services Authority Regulations regarding the application of risk management for non-bank financial service institutions.

Article 51

(1) DPPK Management or Acting Managers must apply effective and efficient internal controls to provide reasonable assurance that business activities are carried out in accordance with targets and strategies, other internal regulations of Pension Funds, and provisions of legislation.

(2) Provisions regarding internal controls as referred to in paragraph (1) refer to Financial Services Authority Regulations regarding the application of risk management for non-bank financial service institutions.

CHAPTER XIII
PENSION FUND BUSINESS PLANS

Article 52

(1) Pension Funds must formulate business plans describing Pension Fund business activities over a 1 (one) year period.

(2) Business plans as referred to in paragraph (1) must include at least:
a. executive summary; b. management policies and strategies;
c. application of risk management and compliance;
d. application of Pension Fund Governance; e. financial performance of Pension Funds in previous periods; f. projected financial reports along with assumptions used; g. funding plans (specific to DPPK); h. investment plans;
i. policies and marketing plans (specific to DPLK); and
j. other information.

(3) Pension Funds must submit business plans as referred to in paragraph (1) to the Financial Services Authority no later than November 30.

(4) The Financial Services Authority may request Pension Funds to adjust business plans as referred to in paragraph (1) in the event that:
a. the submitted business plan is assessed as not fully meeting the provisions of this Financial Services Authority Regulation and/or other provisions in the field of Pension Funds; and/or b. other conditions that in the opinion of the Financial Services Authority may affect Pension Funds in fulfilling business plans.

(5) Pension Funds must submit adjustments to business plans within the time limits established by the Financial Services Authority.

(6) Pension Funds may only make changes to business plans as referred to in paragraph (1) once and must be submitted no later than the end of June of the current year.

(7) Changes as referred to in paragraph (7) must be submitted to the Financial Services Authority no later than 15 (fifteen) working days before the implementation of business plan changes.

(8) Provisions regarding the form, structure, and procedures for submitting business plans as referred to in paragraph (1) are regulated in Financial Services Authority Regulations regarding periodic reports of Pension Funds.

CHAPTER XIV
INFORMATION DISCLOSURE

Article 53
Pension Funds must implement information transparency regarding Pension Fund products or services and the use of Participant data, guided by Financial Services Authority Regulations regarding consumer protection in the financial services sector.

Article 54

(1) Pension Funds must provide information to the Financial Services Authority completely, in a timely manner, and efficiently.

(2) Pension Funds must have reliable and trusted financial reporting systems for supervision purposes and other stakeholders.

Article 55

(1) Pension Funds must disclose to the Financial Services Authority in the event of important matters including:
a. resignation or dismissal of external auditors; b. material transactions with related parties;
c. ongoing and/or potential conflicts of interest; and
d. other material information regarding Pension Funds.

(2) Disclosure of important matters as referred to in paragraph (1) is included in the report on the application of Pension Fund Governance.

CHAPTER XV
RELATIONS WITH STAKEHOLDERS

Article 56
Pension Funds must:
a. respect the rights of stakeholders; and b. fulfill obligations arising from provisions of legislation and/or agreements made with employees, Participants, parties entitled to benefits, and/or other stakeholders.

CHAPTER XVI
BUSINESS ETHICS

Article 57

(1) DPPK Management, Acting Managers, the Supervisory Board, DPS, and Pension Fund employees are prohibited from giving or offering anything, directly or indirectly, to other parties, to influence decision-making related to Pension Funds, in violation of provisions of legislation.

(2) DPPK Management, Acting Managers, the Supervisory Board, DPS, and Pension Fund employees are prohibited from receiving anything for personal interests in violation of provisions of legislation, directly or indirectly, which may influence decision-making related to Pension Funds.

Article 58
Pension Funds must create guidelines on ethical behavior, containing business ethics values, as a guide for committees and all Pension Fund employees.

CHAPTER XVII
SELF-ASSESSMENT AND REPORTS ON THE APPLICATION OF PENSION FUND GOVERNANCE

Article 59

(1) Pension Funds must conduct self-assessments regarding the application of Pension Fund Governance at least 1 (one) time within 1 (one) year.

(2) Self-assessments regarding the application of Pension Fund Governance as referred to in paragraph (1) are conducted based on Pension Fund Governance guidelines.

Article 60

(1) Pension Funds must formulate and submit reports on the application of Pension Fund Governance at the end of each fiscal year to the Financial Services Authority.

(2) Reports on the application of Pension Fund Governance as referred to in paragraph (1) must consist of at least:
a. transparency in the application of Pension Fund Governance, which includes the disclosure of all aspects of the implementation of Pension Fund Governance principles;

b. self-assessment (self assessment) on the application of Pension Fund Governance as referred to in Article 59; and

c. action plan (action plan) which includes corrective action (corrective action) that is necessary and the completion time and obstacles/hindrances to its completion, if there are still deficiencies in the application of Pension Fund Governance.

(3) Provisions regarding the form, structure, and procedures for submitting reports on the application of Pension Fund Governance as referred to in paragraph (1) are regulated in a Financial Services Authority Regulation regarding periodic reports of Pension Funds.

CHAPTER XVIII
OTHER PROVISIONS

Article 61

(1) The application of Pension Fund Governance for DPLK may be combined with the application of Founder governance.

(2) In the event that the application of Pension Fund Governance for DPLK is combined with the application of Founder governance as referred to in paragraph (1), the Founder is required to ensure that the Founder's governance contains all aspects of the application of Pension Fund Governance as referred to in this Financial Services Authority Regulation.

CHAPTER XIX
ADMINISTRATIVE SANCTIONS

Article 62

Administrative sanctions may consist of:
a. written warning; b. reduction of the governance risk assessment level; and/or

c. implementation of a re-evaluation of the competence and propriety of the DPPK Management, Acting Management, Supervisory Council, and/or DPS.

Article 63

(1) Violations of the provisions as referred to in Article 2 paragraph (1) and (2), Article 5 paragraph (2), (3), and (4), Article 6 paragraph (1), (3), (4), (5), and (6), Article 7, Article 8, Article 9 paragraph (2) and (3), Article 10 paragraph (1), (3), (4), and (5), Article 11, Article 12, Article 13, Article 14, Article 16 paragraph (1), Article 17, Article 18 paragraph (1), (2) and (3), Article 19 paragraph (1), (7), and (8), Article 20, Article 21, Article 23, Article 25, Article 26 paragraph (1), Article 27 paragraph (1), (2), (3), (4), and (5), Article 28 paragraph (2), Article 31 paragraph (1) and (4), Article 33, Article 34, Article 36, Article 37, Article 38 paragraph (1), (2), and (3), Article 39 paragraph (1) and (4), Article 41 paragraph (2), Article 42 paragraph (3), Article 45, Article 46, Article 47 paragraph (1), (2), and (3), Article 48 paragraph (1) and (2), Article 49 paragraph (1), Article 50 paragraph (1), Article 51 paragraph (1), Article 52 paragraph (1), (3), (6), and (7), Article 53, Article 54, Article 55 paragraph (1), Article 56, Article 57, Article 58, Article 59 paragraph (1), Article 60 paragraph (1), and/or Article 61 paragraph (2) of this Financial Services Authority Regulation are subject to administrative sanctions consisting of:
a. written warning; and b. reduction of the governance risk assessment level.

(2) Warning sanctions as referred to in paragraph (1) letter a, are issued in writing by the Financial Services Authority to the Pension Fund for a maximum of 3 (three) consecutive times with each validity period of a maximum of 2 (two) months.

(3) If by the end of the validity period of the third written warning, the Pension Fund has not resolved the cause of the imposition of sanctions as referred to in paragraph (1), a sanction of reduction of the governance risk assessment level as referred to in Article 62 letter b shall be imposed.

(4) Provisions regarding the consequences of the imposition of sanctions for the reduction of the governance risk assessment level as referred to in paragraph (3) which impact the risk assessment level are implemented in accordance with the Financial Services Authority Regulation regarding the risk assessment level of financial service institutions.

(5) In the event that before the validity period of the written warning sanction as referred to in paragraph (2) expires, the Pension Fund has fulfilled the provisions as referred to in paragraph (1), the Financial Services Authority revokes the warning sanction and cancels the sanction of reduction of the governance risk assessment level as referred to in Article 62 letter b.

Article 64

In the event that a Pension Fund receives administrative sanctions in the form of written warnings as referred to in Article 63 paragraph (1) letter a cumulatively 5 (five) times or more within a period of 2 (two) years, sanctions for the implementation of a re-evaluation of the competence and propriety of the DPPK Management, Acting Management, Supervisory Council, and/or DPS may be imposed upon the request of the Financial Services Authority.

CHAPTER XX
CLOSING PROVISIONS

Article 65

Upon the time this Financial Services Authority Regulation takes effect, the Financial Services Authority Regulation Number 16/POJK.05/2016 concerning Guidelines for Pension Fund Governance (State Gazette of the Republic of Indonesia Year 2016 Number 48, Supplement to the State Gazette of the Republic of Indonesia Number 5859) is revoked and declared invalid.

This copy is consistent with the original
Director of Law 1
Legal Department signed
Yuliana

Article 66

This Financial Services Authority Regulation takes effect 6 (six) months from the date of its promulgation.

To ensure that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on 27 May 2019

CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on 12 June 2019

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2019 NUMBER 106

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 15 /POJK.05/2019
CONCERNING
PENSION FUND GOVERNANCE

I. GENERAL

Based on Law Number 11 of 1992 concerning Pension Funds (Pension Fund Law), a Pension Fund is a legal entity that manages and operates a program promising pension benefits. The program in question is a Pension Program that seeks to provide pension benefits for Pension Fund Participants through a fund formation system from Participant contributions and/or Employer contributions which are managed separately from the assets of the Pension Fund Founder and are carried out in accordance with statutory provisions. Pension Funds play a role in ensuring the welfare of Indonesian workers during retirement and assisting the development of the real sector through investments. To carry out its role optimally, Pension Funds need to be managed effectively and efficiently. To realize this, it is necessary to have a form of comprehensive application of governance for Pension Funds.

The implementation of Pension Fund Governance must always be based on five basic principles, namely:

1. transparency, namely openness in expressing material and relevant information and openness in carrying out the decision-making process;

2. accountability, namely a state of Pension Fund administration that can explain the implementation of the functions of each relevant party in accordance with statutory provisions and general practice;

3. responsibility, namely a state of Pension Fund administration that can affirm and explain the role and status of each relevant party for every process of making and applying policies in the Pension Fund;

4. independence, namely a state of the Pension Fund that is free from conflicts of interest and/or from the influence or pressure of any party that is not in accordance with statutory provisions and general practice; and

5. fairness, namely justice and equality in fulfilling the rights of each party arising from legally binding agreements and statutory provisions and general practice.

In line with this, the Financial Services Authority has provisions regarding governance that regulate the financial services sector, one of which is the Financial Services Authority Regulation Number 16/POJK.05/2016 concerning Guidelines for Pension Fund Governance. This regulation is a conversion of the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number KEP-136/BL/2006 concerning Guidelines for Pension Fund Governance. In reality, these provisions were not strong enough to prevent the inability of Pension Funds to manage their assets and optimize the role of Pension Funds. Therefore, it is necessary to strengthen the application of Pension Fund Governance in the form of refining provisions regarding Pension Fund Governance, which is a form of harmonization of similar regulations in the financial services sector and accommodates governance provisions for DPLK. With the obligation to apply Pension Fund Governance, it is expected to support the growth of the Pension Fund industry and the Pension Fund itself can maintain the careful management of its assets.

This Financial Services Authority Regulation contains provisions regarding the obligation to apply Pension Fund Governance, provisions regarding Pension Fund committees, the appointment of external auditors, reporting, and sanction provisions.

II. ARTICLE BY ARTICLE

Article 1

Clear enough.

Article 2

Paragraph (1)

The application of Pension Fund Governance principles in every Pension Fund business activity, including during the preparation of vision, mission, strategic plans, policy implementation, and internal supervision steps at all levels or tiers of the organization.

Paragraph (2)

Clear enough.

Paragraph (3)

Letter a

The implementation of duties and responsibilities of DPPK Management, Acting Management, Supervisory Council, and DPS refers to the PDP and statutory provisions, including provisions regulating the implementation of duties and responsibilities thereof.

Letter b

Clear enough.

Letter c

Clear enough.

Letter d

Clear enough.

Letter e

Clear enough.

Letter f

Clear enough.

Letter g

Transparency includes aspects of disclosure of qualitative and quantitative Pension Fund information to stakeholders.

Paragraph (4)

Clear enough.

Article 3

Clear enough.

Article 4

Clear enough.

Article 5

Paragraph (1)

Pension Funds are established because the Founder establishes a PDP which is subsequently approved by the Financial Services Authority. Therefore, the Founder is fully responsible for the administration of the Pension Fund until the Pension Fund is dissolved.

Paragraph (2)

One example of the Founder's support for DPPK in applying Pension Fund Governance is in evaluating the performance of DPPK Management and the Supervisory Council; one aspect evaluated is the application of Pension Fund Governance.

One example of the Founder's support for DPLK in applying Pension Fund Governance is providing the DPLK's needs to apply Pension Fund Governance.

Paragraph (3)

Clear enough.

Paragraph (4)

Clear enough.

Article 6

Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

The term "half" refers to 50% (fifty percent). For example, if the number of DPPK Management members is 3 (three) people, then at least 2 (two) DPPK Management members must reside within the territory of the Republic of Indonesia.

Paragraph (5)

Clear enough.

Paragraph (6)

Clear enough.

Paragraph (7)

The term "financial function" refers to the function of financial administration, not including functions that carry out investment activities.

Paragraph (8)

The term "relevant knowledge" refers to knowledge appropriate to the field of duty of DPPK Management. For example, for DPPK Management members specializing in investment, they must have knowledge in the field of investment; or for DPPK Management members specializing in compliance, they must know the legal aspects of every action taken by the DPPK and master the regulations, at least for the DPPK.

Paragraph (9)

Clear enough.

Article 7

Letter a

Clear enough.

Letter b

Clear enough.

Letter c

Clear enough.

Letter d

Clear enough.

Letter e

The term "independent" refers to the principle related to independence, while "objective" refers to the principle related to fairness.

Letter f

Clear enough.

Article 8

The term "majority" refers to more than 50% (fifty percent) of the total number of DPPK Management members.

The term "family relationship up to the second degree" refers to both vertical and horizontal relationships, including in-laws, sons/daughters-in-law, and siblings-in-law, thus covering:

1. biological/step/adopted parents;

2. biological/step/adopted siblings together with husband or wife;

3. biological/step/adopted children;

4. biological/step/adopted grandparents;

5. biological/step/adopted grandchildren;

6. biological/step/adopted siblings of parents together with husband or wife;

7. husband or wife;

8. in-laws (parents-in-law);

9. siblings-in-law;

10. husband or wife of biological/step/adopted children;

11. grandparents of husband or wife;

12. husband or wife of biological/step/adopted grandchildren; and/or

13. biological/step/adopted siblings of husband or wife together with husband or wife.

Article 9

Paragraph (1)

This provision means that the management of DPLK is the responsibility of the DPLK Founder.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Article 10

Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

The term "half" refers to 50% (fifty percent). For example, if the number of Acting Management members is 3 (three) people, then at least 2 (two) Acting Management members must reside within the territory of the Republic of Indonesia.

Paragraph (5)

Clear enough.

Paragraph (6)

Clear enough.

Paragraph (7)

The term "relevant knowledge" refers to knowledge appropriate to the field of duty of Acting Management. For example, for Acting Management members specializing in investment, they must have knowledge in the field of investment; or for Acting Management members specializing in compliance, they must know the legal aspects of every action taken by the DPLK and master the regulations, at least for the DPLK.

Paragraph (8)

Clear enough.

Article 11

Clear enough.

Article 12

The term "majority" refers to more than 50% (fifty percent) of the total number of Acting Management members.

Article 13

Letter a

The term "fully responsible" refers to duties and/or obligations as stipulated in the PDP and statutory provisions in the field of Pension Funds.

Letter b

Clear enough.

Letter c

Clear enough.

Letter d

Clear enough.

Letter e

Clear enough.

Letter f

Clear enough.

Letter g

Clear enough.

Letter h

Clear enough.

Letter i

Clear enough.

Article 14

Letter a

The term "conflict of interest" refers to a state where there is a conflict between the economic interests of DPPK Management or Acting Management members and the economic interests of the Pension Fund, the Founder's private interests, Partner Founder, Supervisory Council members, DPS members, and/or Pension Fund employees.

Letter b

Clear enough.

Letter c

This does not include the definition of personal profit, among others, in the case where DPPK Management or Acting Management members as Participants receive pension benefits fairly.

Article 15

Letter a

One way to ensure Participants are given a choice of investment packages or types is to evaluate Participant risk tolerance so that it can be adjusted to the Participant's chosen package or type of investment.

Letter b

Clear enough.

Letter c

Clear enough.

Letter d

The term "disclosed in detail" refers to the disclosure of costs based on the type of costs charged to Participants according to the PDP, not the total costs charged to Participants.

Letter e

In offering assistance in choosing a package or type of investment, the Pension Fund may provide simulations or projections of expected benefits.

Article 16

Paragraph (1)

Clear enough.

Paragraph (2)

Letter a

The term "bank or life insurance company" refers to a bank or life insurance company as the DPLK Founder.

Letter b

Clear enough.

Letter c

Clear enough.

Article 17

Clear enough.

Article 18

Clear enough.

Article 19

Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

Clear enough.

Paragraph (5)

Clear enough.

Paragraph (6)

Clear enough.

Paragraph (7)

Clear enough.

Paragraph (8)

The term "half" refers to 50% (fifty percent). For example, if the number of DPPK Supervisory Council members is 3 (three) people, then at least 2 (two) DPPK Supervisory Council members must reside within the territory of the Republic of Indonesia.

Paragraph (9)

Relevant knowledge for the position of DPPK Supervisory Council members includes knowledge regarding DPPK supervision mechanisms and techniques.

Article 20

Clear enough.

Article 21

The term "majority" refers to more than 50% (fifty percent) of the total number of DPPK Supervisory Council members.

Article 22

The term "waiting period" refers to the time interval between the effective end of the relevant person's term as DPPK Management and the effective appointment of the relevant person as a Participant Representative Supervisory Council member.

Article 23

Letter a

Clear enough.

Letter b

The term "monitoring the effectiveness of the application of Pension Fund Governance" includes monitoring and evaluating the implementation of Pension Fund Governance.

Letter c

Clear enough.

Letter d

Clear enough.

Letter e

Clear enough.

Letter f

Clear enough.

Letter g

Clear enough.

Letter h

Clear enough.

Letter i

Clear enough.

Letter j

Clear enough.

Letter k

The term "report on the application of Pension Fund Governance" refers to the report on the application of Pension Fund Governance submitted to the Financial Services Authority.

Article 24

Clear enough.

Article 25

Letter a

The term "conflict of interest" refers to a state where there is a conflict between the economic interests of Supervisory Council members and the economic interests of the Pension Fund, the Founder's private interests, Partner Founder, DPPK Management members, Acting Management members, DPS members, and/or Pension Fund employees.

Letter b

Clear enough.

Letter c

This does not include the definition of personal profit, among others, in the case where the Supervisory Council as a Participant receives pension benefits fairly.

Letter d

Clear enough.

Article 26

Clear enough.

Article 27

Clear enough.

Article 28

Clear enough.

Article 29

Clear enough.

Article 30

Paragraph (1)

The term "committee" refers to a committee located under the board of commissioners of a bank or life insurance company acting as the DPLK Founder.

Paragraph (2)

The term "relevant knowledge" refers to knowledge appropriate to the field of duty of the committee. For example, for a committee specializing in risk monitoring, knowing how to mitigate risks that the DPLK may face; or for a committee specializing in internal audit, having knowledge of activities that may cause conflicts of interest with the DPLK.

Paragraph (3)

Clear enough.

Paragraph (4)

Clear enough.

Paragraph (5)

Clear enough.

Article 31

Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

The term "half" refers to 50% (fifty percent). For example, if the number of DPS members is 3 (three) people, then at least 2 (two) DPS members must reside within the territory of the Republic of Indonesia.

Article 32

Clear enough.

Article 33

The term "majority" refers to more than 50% (fifty percent) of the total number of DPS members.

Article 34

Clear enough.

Article 35

Clear enough.

Article 36

Letter a

The term "conflict of interest" refers to a state where there is a conflict between the economic interests of DPS members and the economic interests of the Pension Fund, the Founder's private interests, Partner Founder, DPPK Management members, Acting Management members, Supervisory Council members, and/or Pension Fund employees.

Letter b

Clear enough.

Letter c

This does not include the definition of personal profit, among others, in the case where the DPS as a Participant receives pension benefits fairly.

Article 37

Paragraph (1)

Clear enough.

Paragraph (2)

The term "Sharia financial service institution" refers to a financial service institution that conducts all or part of its business using Sharia principles.

Article 38

Clear enough.

Article 39

Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

The term "third party" refers to the administrator.

Article 40

Clear enough.

Article 41

Paragraph (1)

Clear enough.

Paragraph (2)

The term "net assets" refers to net assets obtained from the latest annual financial report audited by a public accountant.

Article 42

Clear enough.

Article 43

Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

The term "other party" refers to parties outside the Pension Fund that do not have financial, management, and/or family relationships up to the second degree with the Supervisory Council, DPPK Management, Acting Management, and/or Founder, or other relationships that can influence their ability to act independently.

Paragraph (5)

Clear enough.

Article 44

Clear enough.

Article 45

Paragraph (1)

The external auditor of a Pension Fund is a public accountant who has obtained a registered certificate from the Financial Services Authority as referred to in the Financial Services Authority Regulation regarding the use of public accountant services and public accounting offices in financial services activities.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Article 46

Paragraph (1)

An actuary is an actuarial consultant who has obtained a registered certificate from the Financial Services Authority as referred to in the Financial Services Authority Regulation regarding the registration and supervision of actuarial consultants, public accountants, and appraisers conducting activities in the non-bank financial industry.

Paragraph (2)

Letter a

Clear enough.

Letter b

Actuarial practice standards are actuarial practice standards established by an actuarial association recognized by the Ministry of Finance of the Republic of Indonesia.

Paragraph (3)

Clear enough.

Article 47

Paragraph (1)

Clear enough.

Paragraph (2)

Clear enough.

Paragraph (3)

Clear enough.

Paragraph (4)

Letter a

Clear enough.

Letter b

Clear enough.

Letter c

The term "peer group" refers to a group having business characteristics, risk profiles, and/or complexity relatively similar to the relevant Pension Fund.

Letter d

Clear enough.

Article 48

Clear enough.

Article 49

Clear enough.

Article 50

Clear enough.

Article 51

Clear enough.

Article 52

Paragraph (1)

Clear enough.

Paragraph (2)

Letter a

Clear enough.

Letter b

The term "management policies and strategies" refers to management policies and strategies that are specific for the next 1 (one) year.

Letter c

The term "application of risk management and compliance" refers to a summary report on the application of risk management as referred to in the Financial Services Authority Regulation regarding the application of risk management for non-bank financial service institutions.

Letter d

The term "application of Pension Fund Governance" refers to information on how the Pension Fund applies the established Pension Fund Governance Guidelines.

Letter e

The term "previous period financial performance of the Pension Fund" refers to information on key financial performance indicators of the Pension Fund in the last 2 (two) years.

Letter f

The term "projection of financial reports and assumptions used" refers to information on net asset projections including their main components for the next 3 (three) years.

Letter g

The term "funding plan" refers to a funding plan for the next 1 (one) year compared to the actual DPPK funding position.

Letter h

The term "investment plan" for DPPK refers to an investment plan for the next 1 (one) year compared to the actual DPPK investment position.

The term "investment plan" for DPLK refers to an investment placement plan.

Letter i

The term "marketing policies and plans" refers to information on DPLK marketing policies and plans for the next 1 (one) year.

Letter j

The term "other information" refers to other plans that need to be elaborated (if any) but are not included in the scope of the business plan established in letters a through i, for example, plans for the development of Pension Fund employees.

Paragraph (3)

Clear enough.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Paragraph (6)
An example of the implementation of these provisions is that changes to the 2019 business plan can be amended at the latest by the end of June 2019.

Paragraph (7)
An example of the implementation of these provisions is that if the implementation of changes to the 2019 business plan is carried out on June 29, 2019, then the Pension Fund is required to submit the change plan at the latest by May 7, 2019.

Paragraph (8)
Clearly stated.

Article 53
Clearly stated.

Article 54
Clearly stated.

Article 55
Paragraph (1)
Letter a
Clearly stated.

Letter b
What is meant by "material transaction" is a transaction categorized as a material transaction based on the assessment of the DPPK Management, Acting Management, or Supervisory Board and/or based on financial accounting standards.

Letter c
Clearly stated.

Letter d
Clearly stated.

Paragraph (2)
Clearly stated.

Article 56
Clearly stated.

Article 57
Clearly stated.

Article 58
Clearly stated.

Article 59
Clearly stated.

Article 60
Paragraph (1)
Clearly stated.

Paragraph (2)
Letter a
Aspects of implementing Pension Fund Governance principles include:

1. the number of meetings of the DPPK Management, Acting Management, Supervisory Board, and/or DPS;
2. the number of attendances by the DPPK Management, Acting Management, Supervisory Board, and/or DPS in meetings;
3. the report on the results of the Supervisory Board's supervision over the application of Pension Fund Governance; and
4. disclosure of important matters as referred to in Article 55 paragraph (1).

Letter b
Self-assessment conducted by the Pension Fund in the form of a questionnaire whose format and structure are regulated in the Financial Services Authority Regulation regarding periodic Pension Fund reports.

Letter c
Clearly stated.

Paragraph (3)
Clearly stated.

Article 61
Paragraph (1)
Banks or life insurance companies that are Founders of Pension Fund Institutions (DPLK) have been required to apply corporate governance principles based on regulations in the financial services sector. Based on Law Number 11 of 1992 concerning Pension Funds, the Founder of a DPLK is the DPLK Management, and DPLK activities are attached to the activities of the DPLK Founder. Therefore, the application of Pension Fund Governance can be implemented simultaneously with the application of corporate governance for the DPLK Founder.

Paragraph (2)
In the event that the application of corporate governance for the DPLK Founder does not yet include some aspects regulated in this Financial Services Authority Regulation, the DPLK Founder adjusts the application of corporate governance for the DPLK Founder so that it also includes all aspects of the application of Pension Fund Governance regulated in this Financial Services Authority Regulation.

Article 62
Clearly stated.

Article 63
Clearly stated.

Article 64
Clearly stated.

Article 65
Clearly stated.

Article 66
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6356