OJK Circular No. 2/SEOJK.05/2015 on Pension Fund Risk Level Assessment

To:
Pension Fund Administrators

Attn.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 2 /SEOJK.05/2015 CONCERNING PENSION FUND RISK LEVEL ASSESSMENT

In relation to the mandate of the provisions of Article 5 paragraph (4), Article 7 paragraph (3), and Article 8 paragraph (6) of the Financial Services Authority Regulation Number 10/POJK.05/2014 concerning Risk Level Assessment of Non-Bank Financial Service Institutions (State Gazette of the Republic of Indonesia Year 2014 Number 197, Supplement to the State Gazette of the Republic of Indonesia Number 5575), it is necessary to regulate implementation provisions regarding risk level assessment, format and procedures for submitting risk assessment results reports, as well as format and procedures for submitting follow-up action plans for risk level assessments for pension funds in the Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

1. Pension Fund means a pension fund as referred to in legislation in the field of pension funds, excluding pension funds whose entire business activities are carried out based on Sharia principles.

2. Financial Services Authority, hereinafter abbreviated as OJK, is an independent institution free from the interference of other parties, which has the function, duties, and authority for regulation, supervision, examination, and investigation as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

II. GUIDELINES FOR RISK LEVEL ASSESSMENT AND PREPARATION OF RISK LEVEL ASSESSMENT RESULTS REPORTS

1. Pension Fund risk level assessment is conducted by considering the materiality and significance of a risk area to the total risk of the Pension Fund.

2. Pension Fund risk level assessment is conducted by taking into account the risk history that has occurred and the probability of risk occurrence in the future.

3. Risk level assessment for each type of Pension Fund is prepared in accordance with the guidelines as referred to in Appendix I which is an inseparable part of this OJK Circular Letter.

4. The Risk Level Assessment Results Report must be prepared and signed by the administrator who oversees the risk management function and acknowledged by the chairman of the administrators.

5. The Risk Level Assessment Results Report for Pension Funds must be prepared in accordance with the format as referred to in Appendix II which is an inseparable part of this OJK Circular Letter.

III. GUIDELINES FOR PREPARATION OF FOLLOW-UP ACTION PLANS FOR RISK LEVEL ASSESSMENT

1. The follow-up action plan for risk level assessment is signed by the administrators.

2. The follow-up action plan for Pension Fund risk level assessment is prepared in accordance with the format as referred to in Appendix III which is an inseparable part of this OJK Circular Letter.

IV. PROCEDURES FOR SUBMISSION OF RISK LEVEL ASSESSMENT RESULTS REPORTS AND FOLLOW-UP ACTION PLANS FOR RISK LEVEL ASSESSMENT

1. The risk level assessment results report and follow-up action plan for risk level assessment are submitted to OJK online via the OJK data communication network system.

2. In the event that the OJK data communication network system is not yet available, the risk level assessment results report and follow-up action plan for risk level assessment are submitted online via the official email of the Pension Fund by attaching a softcopy of the risk level assessment results report and follow-up action plan for risk level assessment in spreadsheet format to rbs.dapen@ojk.go.id.

3. In the event that OJK experiences technical difficulties at the time of the deadline for submission of the risk level assessment results report or follow-up action plan for risk level assessment so that:
   a. The Pension Fund cannot submit the risk level assessment results report or follow-up action plan for risk level assessment online as referred to in item 1 or item 2; and/or b. OJK cannot receive the risk level assessment results report or follow-up action plan for risk level assessment online as referred to in item 1 or item 2, OJK announces in writing to the Pension Fund on the same day after the technical difficulty occurs and the Pension Fund is required to submit a softcopy of the risk level assessment results report or follow-up action plan for risk level assessment in spreadsheet format offline no later than the next working day.

4. In the event of technical difficulties as referred to in item 3, the Pension Fund submits a softcopy of the risk level assessment results report and follow-up action plan for risk level assessment in spreadsheet format offline as referred to in item 3, via a letter signed by the administrators and addressed to:
   Financial Services Authority attn. Director of Pension Fund and Manpower Social Security Insurance Supervision Sumitro Djojohadikusumo Building Jl. Lapangan Banteng Timur No. 2—4 Jakarta 10710

5. Submission of a softcopy of the risk level assessment results report and follow-up action plan for risk level assessment in spreadsheet format offline as referred to in item 3, can be done in one of the following ways:
   a. handed over directly to the OJK office as referred to in item 4; b. sent via registered post office; or
   c. sent via a courier/courier service company.

6. The Pension Fund is deemed to have submitted the risk level assessment results report and follow-up action plan for risk level assessment with the following provisions:
   a. for submission online via the OJK data communication network system, evidenced by a receipt from OJK; b. for submission online via email, evidenced by an email receipt from OJK; or
   c. for offline submission, evidenced by:

   1. a receipt letter from OJK, if the report is handed over directly to the OJK office as referred to in item 4; or
   2. a shipping receipt from the post office or courier/courier service company, if the report is sent via post office or courier/courier service company.

V. CLOSING

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

To ensure that everyone knows, order the announcement of this Financial Services Authority Circular Letter by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on January 29, 2015
EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
SUPERVISOR
FINANCIAL SERVICES AUTHORITY,
Signed,
FIRDAUS DJAELANI

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 10 DATE 3 FEBRUARY 2015

Copy in accordance with the original
Director of Legal Affairs I
Department of Law,
Signed,
Sudarmaji

APPENDIX I
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 2 /SEOJK.05/2015 CONCERNING PENSION FUND RISK LEVEL ASSESSMENT

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  GUIDELINES FOR RISK LEVEL ASSESSMENT
  PENSION FUND

TABLE OF CONTENTS

CHAPTER I INTRODUCTION.......................................................................2
A. Definition and Scale of Risk Level Assessment........................ 2
B. Purpose of Risk Level Assessment Guidelines .............................. 3
C. General Principles of Risk Level Assessment .................................. 3

CHAPTER II : RISK LEVEL CALCULATION PROCESS...........................5
A. Overview of Risk Level Calculation........................ 5
B. Inherent Risk Assessment......................................................... 5
C. Management and Control Assessment................................. 6
D. Determination of Net Risk Value................................................. 6
E. Determination of Fund Support Risk Value ................................ 8
F. Determination of Overall Risk Value ...................................... 8

CHAPTER III : RISK LEVEL ASSESSMENT PER RISK TYPE................11
A. Governance Risk.............................................................. 11
B. Management Risk................................................................... 13
C. Strategy Risk ........................................................................ 16
D. Operational Risk ................................................................. 18
E. Asset and Liability Risk ....................................................... 23
F. Fund Support Risk .......................................................... 27
Example of Pension Fund Risk Level Calculation (PPMP DPPK)……..29 Example of Pension Fund Risk Level Calculation (PPIP DPPK).....….30 Example of Pension Fund Risk Level Calculation (DPLK)…………..….31

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  CHAPTER I
  INTRODUCTION

A. DEFINITION AND SCALE OF RISK LEVEL ASSESSMENT

In the course of business operations, Pension Funds face various risks that can result in the failure to achieve Pension Fund objectives. Pension Funds need to apply risk management to minimize the risks faced. One part of risk management is conducting risk measurement and assessment. The purpose of risk assessment is to determine the probability of the Pension Fund experiencing failure. Risk assessment activities should be conducted continuously and always updated periodically by the Pension Fund. In accordance with regulations, Pension Funds are required to submit the results of their Pension Fund risk assessment to OJK at least once a year.

The probability of the Pension Fund experiencing failure is reflected in the risk value and risk level. Risk levels are grouped into five levels: low, medium-low, medium-high, high, and very high. The risk value has a range of 0 to 4. The higher the risk value, the greater the possibility that the Pension Fund will experience failure. Conversely, if the risk value is lower, the likelihood of the Pension Fund experiencing failure is also smaller. Risk values and risk levels can be seen in Table 1.

Table 1
Risk Value and Risk Level

Risk Value (RV)
Risk Level
Explanation
0 < RV ≤ 1
Low
The probability of the Pension Fund failing to meet its obligations is relatively low. The Pension Fund is indicated to be very healthy and has the ability to meet its obligations to participants. 1 < RV ≤ 1.5 Medium Low The probability of the Pension Fund failing to meet its obligations is at a medium to low level. Generally, the Pension Fund is healthy but there is a potential for failure to meet its obligations to participants.
1.5 < RV ≤ 2
Medium High
The probability of the Pension Fund failing to meet its obligations is at a medium to high level. Generally, the Pension Fund is less healthy and there is a quite small potential for failure to meet its obligations to participants. 2 < RV ≤ 3 High The probability of the Pension Fund failing to meet its obligations is at a high level. Generally, the Pension Fund is not healthy and has a quite large potential for failure to meet obligations to participants. 3 < RV ≤ 4 Very High The probability of the Pension Fund failing to meet its obligations is at a very high level. Generally, the Pension Fund is not healthy and has a very large potential for failure to meet obligations to participants.

B. PURPOSE OF RISK LEVEL ASSESSMENT GUIDELINES

This guideline aims to provide guidance for Pension Fund administrators in conducting Pension Fund risk level assessments.

C. GENERAL PRINCIPLES OF RISK LEVEL ASSESSMENT

Pension Fund Management needs to pay attention to general principles as follows:

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1. Risk-Based
   Risk level assessment is conducted by identifying various factors that can affect the probability of the Pension Fund failing to achieve its objectives.

2. Materiality
   Pension Funds need to consider the materiality and significance of inherent risk and management control of each type of risk present. The determination of materiality and significance is based on adequate data and information regarding factors affecting the risk level of the Pension Fund.

3. Comprehensive
   The risk level assessment process is conducted on all risk areas of the Pension Fund through structured and integrated analysis.

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  CHAPTER II
  RISK LEVEL CALCULATION PROCESS

A. OVERVIEW OF RISK LEVEL CALCULATION

Risk level calculation is based on the following factors:

1. Inherent risk, which is all risks inherent in each type of Pension Fund activity;
2. Management and control, which are things that can be done by administrators and the board of supervisors to minimize inherent risk levels; and
3. Fund support, which is the available funding that reflects the Pension Fund's ability to meet its obligations and maintain its business.

The risk assessment system framework can be described as follows:

Strategy
Fund Support
Overall Risk Value
Operational
Asset and
Liability
Net Risk
Governance
Management Risk
Inherent Risk
Management &
Control

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  B. INHERENT RISK ASSESSMENT

Inherent risk is risk inherent in Pension Fund activities, without considering the management and control aspects carried out by that Pension Fund. All inherent risks that have an influence on the Pension Fund's ability to meet its obligations, especially financially, fall into this inherent risk measure.

Pension Fund inherent risk is greatly influenced by the characteristics and complexity of the Pension Fund, the type of Pension Fund, and the type of pension program. Inherent risk is also influenced by the operational activities of the Pension Fund. The more diverse and higher the volume of operational activities, the higher the inherent risk of the Pension Fund. The Pension Fund's risk profile determines how large the inherent risk level is ready to be accepted with consideration of the fund support required.

Pension Fund inherent risk assessment is conducted separately from the management and control carried out to reduce that risk. In other words, in this inherent risk assessment, administrators only assess risks that may arise in the implementation of a Pension Fund without considering whether those risks actually occur or do not occur due to strong risk management and control.

C. MANAGEMENT AND CONTROL ASSESSMENT

The management and control aspect refers to how the Pension Fund identifies, measures, monitors, and controls its inherent risks. In practice, this is done through a series of policies and procedures, applied systems, administrative practices, and supervision applied.

The management and control assessment is intended to assess the mechanism or management and control system for each inherent risk exposed to the Pension Fund. Aspects considered in this assessment include management's concern for risk as well as the control systems it possesses, including the risk management framework owned and applied by the pension fund. The results of the management and control assessment will become a risk reduction factor to become net risk.

D. DETERMINATION OF NET RISK VALUE

The determination of net risk value is done in two stages: measuring net risk for each type of risk and measuring the total net risk value.

1. Measurement of net risk value for each type of risk

Net risk value is essentially the inherent risk value after considering management and control. This risk value is the average of the inherent risk value and the management and return value.

Net Risk = (Inherent Risk + Management and Control) / 2

The net risk calculation above is done for strategy risk, operational risk, and asset and liability risk. Management risk and governance risk are net risk values and have no reduction from management and control.

2. Measurement of total net risk value

After the net risk value is obtained for all types of risk, total net risk value measurement is done by weighting each type of risk. The weight for each type of risk is presented in the following table:

Table 2
Risk Weights

No
Type of Risk
Weight (%)
PPMP 1
Weight (%)
PPIP 2
Weight (%)
DPLK 3
1
Governance
15
2
Management
15
20
20
3
Strategy
15
10
10
4
Operational
25
5
Asset and
Liability
30
TOTAL
100

Note:

1. Defined Benefit Pension Program
2. Employer Pension Fund Defined Contribution Program
3. Financial Institution Pension Fund

Total net risk value is calculated with the following formula:

Total Net Risk Value = Σ (from i=1 to 4) (NRi x Weight)

i is the type of risk as listed in Table 2.

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  E. DETERMINATION OF FUND SUPPORT RISK VALUE

Fund support value reflects the Pension Fund's ability to meet its obligations. In determining fund support, the Pension Fund considers the aspects of funding capability and additional funding sources.

Fund support risk value is calculated by weighting the aspects of funding capability and additional funding sources. The weighting of these two aspects differs for Pension Funds implementing Defined Benefit Pension Programs (PPMP) and Employer Pension Funds implementing Defined Contribution Programs (PPIP) as well as Financial Institution Pension Funds (DPLK). The weighting of funding capability and additional funding sources is done in accordance with the following table:

Table 3
Fund Support Risk Weights

No
Component
Weight (%)
PPMP
Weight (%)
DPPK PPIP
Weight (%)
DPLK
1
Funding
Capability
50
10
0
2
Additional
Funding
50
90
0
TOTAL
100
100
0

Total Fund Support Risk Value = Σ (from i=1 to 2) (NRi x Weight)

i is the fund support component as listed in Table 3.

F. DETERMINATION OF OVERALL RISK VALUE

Overall risk value reflects the probability of the Pension Fund's overall failure. Overall risk value is calculated based on total net risk value by considering fund support.

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  The weight for calculating the overall risk value of the Pension Fund is:

Table 4
Overall Risk Weights

No
Component
Weight (%)
PPMP
Weight (%)
DPPK PPIP
Weight (%)
DPLK
1
Total Net Risk
Value
50
60
100
2
Fund Support
Risk Value
50
40
0
TOTAL
100

Furthermore, overall risk value is calculated by summing and weighting the total net risk value with the fund support risk value using the following formula:

NRK = (TNRB x weight_TNRB / 4) + (NRDD x weight_NRDD / 4)

NRK = Overall Risk Value
TNRB = Total Net Risk Value
NRDD = Fund Support Risk Value

In full, the overall risk value calculation formula is presented in the following table:

Table 5
Risk Assessment

Type of Risk
Inherent Risk (IR)
Management &
Control (MC)
Net Risk
Risk Weight (%)
DPPK
PPMP
DPPK
PPIP
DPLK
1. Governance (0-4)
15
2. Management (0-4)
15
20
20
3. Strategy (0-4)
(0-4)
(0-4)
15
10
10
4. Operational (0-4)
(0-4)
(0-4)
25
5. Asset and
Liability
(0-4)
(0-4)
(0-4)
30
Total Net Risk Value
100
1. Funding
Capability (0-4)
50
10
0
2. Additional
Funding (0-4)
50
90
0
Fund Support
100
100
0
1. Total Net Risk
Value (0-4)
50
60
100
2. Fund Support
Risk Value (0-4)
50
40
0
Overall Risk Value (0-4)
100

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  CHAPTER III
  RISK LEVEL ASSESSMENT PER RISK TYPE

This chapter provides guidelines for Pension Funds in conducting risk level assessment per type of risk. The types of risks present in Pension Funds are governance risk, management risk, strategy risk, operational risk, asset and liability risk, and fund support risk.

A. GOVERNANCE RISK

Governance risk is the risk of the Pension Fund failing to achieve its objectives due to the Pension Fund's failure to maintain the best composition of administrators with high competence and integrity. The term administrators in this guideline includes administrators and the board of supervisors. Risks arising from governance will affect the Pension Fund's ability to meet its obligations to participants and other stakeholders. Topics assessed in this risk are as follows:

1) Appointment and dismissal
In this topic, the areas assessed include procedures and legality of documents related to such appointment and dismissal.

2) Composition and proportion
In this topic, the areas assessed include the adequacy of the number and composition of administrators and the clarity of structure and job descriptions.

3) Competence and integrity
In this topic, the areas assessed include the results of fitness and propriety tests, work experience, education and training, and administrator behavior.

4) Leadership
In this topic, the areas assessed include vision and mission as well as the characteristics of the administrators.

The following are general indications of governance risk for each risk value range:

1. Indications of Pension Funds with Low Governance Risk (0 < NR ≤ 1)
   a. Appointment and/or dismissal of administrators is very adequate. b. Composition and proportion of administrators have been sufficient and in accordance with the needs of the Pension Fund.
   c. Competence and integrity of administrators are very adequate and support the duties and authority of administrators.
   d. Administrator leadership is very good.

2. Indications of Pension Funds with Medium-Low Governance Risk (1 < NR ≤ 1.5)
   a. Appointment and/or dismissal of administrators is adequate. b. Composition and proportion of Administrators have been sufficient, but there are indications of being less suitable for the needs of the Pension Fund.
   c. Competence and integrity of administrators are adequate and support the duties and authority of administrators.
   d. Administrator leadership is good.

3. Indications of Pension Funds with Medium-High Governance Risk (1.5 < NR ≤ 2)
   a. Appointment and/or dismissal of administrators is conducted inadequately. b. Composition and proportion of administrators are insufficient.
   c. Competence and integrity of administrators are less adequate and less supportive of the duties and authority of administrators.
   d. Administrator leadership is adequate.

4. Indications of Pension Funds with High Governance Risk (2 < NR ≤ 3)
   a. Appointment and/or dismissal of administrators is conducted with inadequate processes and documentation. b. Composition and proportion of administrators are insufficient.
   c. Competence and integrity of administrators are inadequate and do not support the duties and authority of administrators.
   d. Administrator leadership is less good.

5. Indications of Pension Funds with Very High Governance Risk (3 < NR ≤ 4)
   a. Appointment and/or dismissal of administrators is conducted with very inadequate processes and documentation. b. Composition and proportion of administrators are very insufficient for the needs of the Pension Fund.
   c. Competence and integrity of administrators are very inadequate and hinder the implementation of the duties and authority of administrators.

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  d. Poor leadership of the management board.
  B. GOVERNANCE RISK
  Governance risk is the potential for failure in the implementation of good governance, inappropriate management style, control environment, and behavior of every party involved directly or indirectly with the Pension Fund. The topics assessed in this risk are as follows:
  1) Governance guidelines
  Matters assessed in this topic include the availability and completeness of governance guidelines, the governance formulation process, the implementation of governance guidelines, and the evaluation of the implementation of governance guidelines.
  2) Openness (transparency)
  Matters assessed in this topic include openness in the decision-making process, and openness in the disclosure and provision of relevant information regarding the Pension Fund.
  3) Accountability
  Matters that must be assessed include the determination of functions, activities, and tasks, code of conduct, early detection systems, rewards and punishments, and internal control structure.
  4) Responsiveness
  In this topic, matters that need to be assessed include responsibility to participants, responsibility to employers and/or shareholders of employers, and social responsibility.
  5) Independence
  Areas that must be assessed include the existence of conflicts of interest and intervention by founders, supervisory boards, or other parties.
  6) Fairness and equity
  In this topic, matters that must be assessed include cooperation with business partners, treatment of participants, and treatment of employees.
  7) Risk management
  Matters that must be evaluated for this topic include the availability of risk management guidelines, risk management control units, and the implementation of risk management.

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  The following are general indications of governance risk for each risk value range:

1. Indication of Pension Funds with Very Good (Low) Governance Risk (0 < NR ≤ 1)
   a. The Governance Guidelines owned by the Pension Fund are very adequate. b. The Pension Fund implements the principle of openness very well.
   c. The Pension Fund implements the principle of accountability very well.
   d. The Pension Fund implements the principle of responsibility very well. e. The Pension Fund implements the principle of independence very well. f. The Pension Fund implements the principle of fairness and equity very well. g. The Pension Fund implements the principle of risk management very well.
2. Indication of Pension Funds with Good (Low Medium) Governance Risk (1 < NR ≤ 1,5)
   a. The Governance Guidelines owned by the Pension Fund are adequate. b. The Pension Fund implements the principle of openness well.
   c. The Pension Fund implements the principle of accountability well.
   d. The Pension Fund implements the principle of responsibility well. e. The Pension Fund implements the principle of independence well. f. The Pension Fund implements the principle of fairness and equity well. g. The Pension Fund implements the principle of risk management well.
3. Indication of Pension Funds with Fairly Good (High Medium) Governance Risk (1,5 < NR ≤ 2)
   a. The Governance Guidelines owned by the Pension Fund are fairly adequate. b. The Pension Fund implements the principle of openness fairly well.
   c. The Pension Fund implements the principle of accountability fairly well.
   d. The Pension Fund implements the principle of responsibility fairly well.

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  e. The Pension Fund implements the principle of independence fairly well. f. The Pension Fund implements the principle of fairness and equity fairly well. g. The Pension Fund implements the principle of risk management fairly well.

4. Indication of Pension Funds with Poor (High) Governance Risk (2 < NR ≤ 3)
   a. The Governance Guidelines owned by the Pension Fund are inadequate. b. The Pension Fund implements the principle of openness poorly.
   c. The Pension Fund implements the principle of accountability poorly.
   d. The Pension Fund implements the principle of responsibility poorly. e. The Pension Fund implements the principle of independence poorly. f. The Pension Fund implements the principle of fairness and equity poorly. g. The Pension Fund implements the principle of risk management poorly.
5. Indication of Pension Funds with Bad (Very High) Governance Risk (3 < NR ≤ 4)
   a. The Pension Fund's governance guidelines are unavailable or tend to be inadequate. b. The Pension Fund does not implement the principle of openness to pension fund stakeholders.
   c. The Pension Fund does not implement the principle of accountability in the administration of the pension fund.
   d. The Pension Fund does not implement the principle of responsiveness in the administration of the pension fund. e. The Pension Fund does not implement the principle of independence in the administration of the pension fund. f. The Pension Fund does not implement the principle of fairness and equity in the administration of the pension fund. g. The Pension Fund does not implement the principle of risk management in the administration of the pension fund.

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  C. STRATEGY RISK
  Strategy risk is the potential for the Pension Fund to fail in realizing obligations to participants due to the unsuitability or failure in planning, setting, and implementing strategy, making appropriate decisions, and/or the Pension Fund's lack of responsiveness to external changes. The strategy risk assessment consists of inherent risk assessment and control management assessment. The topics assessed in the inherent risk of strategy risk are as follows:
  1) Suitability of strategy with business environment conditions
  In this topic, matters that need to be assessed include the suitability of the vision, mission, and business direction of the Pension Fund (DPLK), the suitability of the Pension Fund program design with the Pension Fund's environmental conditions, and the suitability of the Pension Fund's strategy with the Pension Fund program design.
  2) Strategic position of the Pension Fund (DPLK)
  Matters that need to be assessed include the adequacy of competitor analysis, the Pension Fund's readiness to face macroeconomic changes, reputation risk, and the diversification plans to be carried out by the Pension Fund. The topics assessed in management and control are as follows:
  1) Strategy formulation and setting process
  In this topic, matters that need to be assessed include the formulation of the level of risk to be taken and acceptable risk tolerance, the involvement of related parties in the formulation of the Pension Fund's design and strategy, and active supervision by the supervisory board and management.
  2) Implementation of strategy plans.
  This can be assessed, among others, from the understanding of the founders, management, and supervisory board of the Pension Fund, the understanding of officials one level below the management, and from key performance indicators.

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  The following are general indications of strategy risk for each risk value range in inherent risk as well as management and control:
  INHERENT RISK

1. Indication of Pension Fund Strategy Risk with Low Inherent Risk (0 < NR ≤ 1)
   a. The strategy owned and implemented by the Pension Fund is very suitable with its environmental conditions. b. The Pension Fund's policies implemented are very suitable with the Pension Fund's strategic position.
2. Indication of Pension Fund Strategy Risk with Low Medium Inherent Risk (1 < NR ≤ 1,5)
   a. The strategy owned and implemented by the Pension Fund is suitable with its environmental conditions. b. The Pension Fund's policies implemented are suitable with the Pension Fund's strategic position.
3. Indication of Pension Fund Strategy Risk with High Medium Inherent Risk (1,5 < NR ≤ 2)
   a. The strategy owned and implemented by the Pension Fund is fairly suitable with its environmental conditions. b. The Pension Fund's policies implemented are fairly suitable with the Pension Fund's strategic position.
4. Indication of Pension Fund Strategy Risk with High Inherent Risk (2 < NR ≤ 3)
   a. The strategy owned and implemented by the Pension Fund is less suitable with its environmental conditions. b. The Pension Fund's policies implemented are less suitable with the Pension Fund's strategic position.
5. Indication of Pension Fund Strategy Risk with Very High Inherent Risk (3 < NR ≤ 4)
   a. The strategy owned and implemented by the Pension Fund is not suitable with its environmental conditions. b. The Pension Fund's policies implemented are not suitable with the Pension Fund's strategic position.

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  MANAGEMENT AND CONTROL

1. Indication of Pension Funds with Very Strong Management and Control over Strategy Risk (0 < MP ≤ 1)
   a. The strategy formulation and setting process created by the Pension Fund is very good. b. The implementation of the Pension Fund's strategy plan is done very well.
2. Indication of Pension Funds with Strong Management and Control over Strategy Risk (1 < MP ≤ 1,5)
   a. The strategy formulation and setting process created by the Pension Fund is good. b. The implementation of the Pension Fund's strategy plan is done well.
3. Indication of Pension Funds with Fair Management and Control over Strategy Risk (1,5 < MP ≤ 2)
   a. The strategy formulation and setting process created by the Pension Fund is fairly good. b. The implementation of the strategy by the Pension Fund is done fairly well.
4. Indication of Pension Funds with Weak Management and Control over Strategy Risk (2 < MP ≤ 3)
   a. The strategy formulation and setting process created by the Pension Fund is less good. b. The implementation of the strategy plan by the Pension Fund is done less well.
5. Indication of Pension Funds with Very Weak Management and Control over Strategy Risk (3 < MP ≤ 4)
   a. The Pension Fund does not have a strategy in running its business. b. There is no strategy plan created by the Pension Fund. D. OPERATIONAL RISK Operational risk is the potential for the Pension Fund to fail in realizing obligations to participants as a result of the unsuitability or failure of internal processes, humans, information technology systems, and/or the occurrence of events originating from outside the industry environment. The operational risk assessment consists of inherent risk assessment and management and control assessment.

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  The topics assessed in the inherent risk of operational risk are as follows:
  1) Pension Fund Complexity
  Matters that must be assessed in this topic include the size and organizational structure, human resources, volume and workload, corporate actions, and new business development (DPLK).
  2) Information technology systems
  Matters that must be assessed include the reliability of information technology systems, changes in information technology systems, and infrastructure.
  3) Fraud and legal issues
  In this topic, areas that must be assessed include the Pension Fund's history of internal fraud and legal issues with participants.
  4) Disturbances to the Pension Fund
  Matters that must be assessed include the frequency and materiality of external events, the location and geographical conditions of the Pension Fund, and the use of third-party services. The topics assessed in management and control are as follows:
  1) Policies and procedures
  Matters that must be noted include the formulation of policies and decision-making processes, standard operating procedures (SOP), policy communication and documentation, and risk management.
  2) Administrative activities
  In this topic, matters that must be noted include the budgeting cycle and activity plans, participant administration, recording, bookkeeping, and transaction reporting, as well as archives and documentation.
  3) Management of information technology systems
  In this topic, areas that must be assessed include the management of information technology systems and infrastructure, blueprints and application change management, data security management, database and information management, and backup and disaster recovery plan procedures.
  4) Prevention of fraud and legal issues
  Areas that must be assessed include the internal control structure and supervision by the audit committee/supervisory board.

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  5) Human resource management
  Areas that must be assessed include human resource planning and strategy, recruitment processes, career development, payroll, and employment benefits, and employee mapping and replacement.
  6) Management of third-party service usage
  In this topic, areas assessed include third-party service usage policies, appointment of service providers, reporting and accountability, and control over the costs of using third-party services. The following are general indications of operational risk for each risk value range in inherent risk as well as management and control:
  INHERENT RISK

1. Indication of Pension Fund Operational Risk with Low Inherent Risk (0 < NR ≤ 1)
   a. The Pension Fund has an organizational structure, human resources, volume, and workload with very low complexity levels. b. The Pension Fund has very adequate information technology and systems capable of supporting the administration of the Pension Fund.
   c. The Pension Fund has never had a history of internal fraud or experienced legal issues with participants.
   d. The Pension Fund has no disturbances in the administration of the Pension Fund.
2. Indication of Pension Fund Operational Risk with Low Medium Inherent Risk (1 < NR ≤ 1,5)
   a. The Pension Fund has an organizational structure, human resources, volume, and workload with low complexity levels. b. The Pension Fund has adequate information technology and systems capable of supporting the administration of the Pension Fund.
   c. The Pension Fund almost never has a history of internal fraud or experiences legal issues with participants.
   d. There are few disturbances occurring in the Pension Fund.
3. Indication of Pension Fund Operational Risk with High Medium Inherent Risk (1,5 < NR ≤ 2)
   a. The Pension Fund has an organizational structure, human resources, volume, and workload with fairly high complexity levels.

• 21 -
  b. The Pension Fund has information technology and systems that are less adequate in supporting the administration of the Pension Fund.
  c. The Pension Fund rarely has a history of internal fraud or experiences legal issues with participants.
  d. Disturbances occurring in the Pension Fund are fairly significant.

4. Indication of Pension Fund Operational Risk with High Inherent Risk (2 < NR ≤ 3)
   a. The Pension Fund has an organizational structure, human resources, volume, and workload with high complexity levels. b. The Pension Fund has information technology and systems that are inadequate.
   c. The Pension Fund often has a history of internal fraud or experiences legal issues with participants.
   d. Disturbances occurring in the Pension Fund are significant.
5. Indication of Pension Fund Operational Risk with Very High Inherent Risk (3 < NR ≤ 4)
   a. The Pension Fund has an organizational structure, human resources, volume, and workload with very high complexity levels. b. The Pension Fund has information technology and systems that are very inadequate.
   c. The Pension Fund frequently has a history of internal fraud or experiences legal issues with participants.
   d. Disturbances occurring in the Pension Fund are very significant.
   MANAGEMENT AND CONTROL
6. Indication of Pension Funds with Very Strong Management and Control (0 < MP ≤ 1)
   a. Standard Operating Procedures (SOP) policies in the Pension Fund are very adequate. b. The Pension Fund's administrative activities are very good.
   c. The Pension Fund's management of information technology systems is very good.
   d. The Pension Fund's mechanisms and policies to prevent internal fraud and legal issues with participants are very good. e. Human resource management in the Pension Fund is very good. f. The management of third-party services in the Pension Fund is very good.

• 22 -

2. Indication of Pension Funds with Strong Management and Control (1 < MP ≤ 1,5)
   a. Standard Operating Procedures (SOP) policies in the Pension Fund are adequate. b. The Pension Fund's administrative activities are good.
   c. The Pension Fund's management of information technology systems is good.
   d. The Pension Fund's mechanisms and policies to prevent internal fraud and legal issues with participants are good. e. Human resource management in the Pension Fund is good. f. The management of third-party services in the Pension Fund is good.
3. Indication of Pension Funds with Fair Management and Control (1,5 < MP ≤ 2)
   a. Standard Operating Procedures (SOP) policies in the Pension Fund are adequate but there are several things that need to be improved. b. The Pension Fund's administrative activities are fairly good but there are several things that need to be improved.
   c. The Pension Fund's management of information technology systems is fairly good but there are several things that need to be improved.
   d. The Pension Fund's mechanisms and policies to prevent internal fraud and legal issues with participants are fairly good but there are several things that need to be improved. e. Human resource management in the Pension Fund is fairly good but there are several things that need to be improved. f. The management of third-party services in the Pension Fund is fairly good but there are several things that need to be improved.
4. Indication of Pension Funds with Weak Management and Control (2 < MP ≤ 3)
   a. The Pension Fund's Standard Operating Procedures (SOP) policies are inadequate. b. The Pension Fund's administrative activities are poor.
   c. The Pension Fund's management of information technology systems is not good.
   d. The Pension Fund's mechanisms and policies to prevent internal fraud and legal issues with participants are not good. e. Human resource management in the Pension Fund is not good. f. The management of third-party services in the Pension Fund is poor.

• 23 -

5. Indication of Pension Funds with Very Weak Management and Control (3 < MP ≤ 4)
   a. Standard Operating Procedures (SOP) policies in the Pension Fund are very inadequate. b. The Pension Fund's administration is very poor.
   c. There is no management of the Pension Fund's information technology systems.
   d. There are no Pension Fund mechanisms and policies to prevent internal fraud and legal issues. e. There is no human resource management in the Pension Fund. f. The management of third-party services is very poor. E. ASSET AND LIABILITY RISK Asset and liability risk is the risk that occurs due to the potential for failure in the management of Pension Fund assets and liabilities that results in a shortage of funds in meeting participant obligations. Asset and liability management is one of the activities of the Pension Fund. The availability of liquid and healthy assets to pay short-term and long-term obligations is one of the goals of administering the Pension Fund. The operational risk assessment consists of inherent risk assessment and management and control assessment. The topics assessed in the inherent risk of asset and liability risk are as follows:
   1) Asset management
   Matters assessed in this topic include the level of reliability and difficulty of asset valuation, investment structure complexity, investment objectives, investment style, investment strategy, asset allocation, default risk, investment in affiliated parties, and asset legal risk.
   2) Liability management
   Matters assessed in this topic include the fairness of assumptions used by actuaries (PPMP), the suitability of actuarial calculation bases with pension fund regulations (PPMP), and the suitability of pension benefit obligation calculations with regulations (PPIP).

• 24 -
  3) Mismatch between assets and liabilities
  Matters assessed in this topic include the mismatch of asset and liability maturity/duration, the mismatch between assets and liabilities in foreign currency (currency gap), and the level of liquidity. The topics assessed in management and control that can be carried out by the Pension Fund are as follows:
  1) Management concern
  Matters assessed in this topic include concern for wealth management objectives, concern for asset risk issues, and the reporting process.
  2) Asset and liability risk management
  Matters assessed in this topic include asset and liability management risk management, liquidity risk management, and actuarial monitoring (PPMP).
  3) Investment risk management
  Matters assessed in this topic include the determination of investment objectives, the determination and review of investment strategies, asset allocation monitoring, limits, and rebalancing, expertise, investment manager selection and monitoring, due diligence processes for investments not listed on the exchange, investment selection–security selection processes, benchmarking and performance measurement processes, risk analysis, objectivity of investment decision-making, investment strategy-expected investment return levels and desired risk levels (risk appetite), and diversification.
  4) Control in conducting asset valuation
  Matters assessed include valuation policies, independent valuation, human resource expertise, reconciliation, frequency, and automation. The following are general indications of asset and liability risk for each risk value range in inherent risk as well as management and control:
  INHERENT RISK

1. Indication of Pension Fund Asset and Liability Risk with Low Inherent Risk (0 < NR ≤ 1)
   a. The Pension Fund's asset management is done very well. b. The Pension Fund's liability management is very good.
   c. The suitability of assets and liabilities is very adequate.

• 25 -
  2. Indication of Pension Fund Asset and Liability Risk with Low Medium Inherent Risk (1 < NR ≤ 1,5)
  a. The Pension Fund's asset management is done well. b. The Pension Fund's liability management is good.
  c. The suitability of assets and liabilities is adequate.
  3. Indication of Pension Fund Asset and Liability Risk with High Medium Inherent Risk (1,5 < NR ≤ 2)
  a. The Pension Fund's asset management is done less well. b. The Pension Fund's liability management is less good.
  c. The suitability of assets and liabilities is less adequate.
  4. Indication of Pension Fund Asset and Liability Risk with High Inherent Risk (2 < NR ≤ 3)
  a. The Pension Fund's asset management is done poorly. b. The Pension Fund's liability management is poor.
  c. The suitability of assets and liabilities is inadequate.
  5. Indication of Pension Fund Asset and Liability Risk with Very High Inherent Risk (3 < NR ≤ 4)
  a. The Pension Fund's asset management is done very poorly. b. The Pension Fund's liability management is very poor.
  c. The suitability of assets and liabilities is very inadequate.
  MANAGEMENT AND CONTROL
  1. Indication of Pension Funds with Very Strong Management and Control (0 < MP ≤ 1)
  a. The management has very high concern for the objectives of asset and liability management. b. The Pension Fund has very adequate asset and liability risk management.
  c. The Pension Fund has carried out investment risk management very well.
  d. The Pension Fund has very strong controls in conducting asset valuation.
  2. Indication of Pension Funds with Strong Management and Control (1 < MP ≤ 1,5)
  a. The management has high concern for the objectives of asset and liability management.

• 26 -
  b. The Pension Fund has adequate asset and liability risk management.
  c. The Pension Fund has conducted investment risk management well.
  d. The Pension Fund has strong controls in conducting asset valuation.

3. Indication of Pension Fund with Fair Management and Control (1,5 < NR ≤ 2)
   a. The Board of Trustees has fair concern for asset and liability management objectives. b. The Pension Fund has fair asset and liability risk management but there are several aspects that need improvement.
   c. The Pension Fund has conducted investment risk management fairly but there are several aspects that need improvement.
   d. The Pension Fund has fair controls in conducting asset valuation but there are several aspects that need improvement.

4. Indication of Pension Fund with Weak Management and Control (2 < NR ≤ 3)
   a. The Board of Trustees has less concern for asset and liability management objectives. b. The Pension Fund has less adequate asset and liability risk management.
   c. The Pension Fund has conducted investment risk management poorly.
   d. The Pension Fund has weak controls in conducting asset valuation.

5. Indication of Pension Fund with Very Weak Management and Control (3 < NR ≤ 4)
   a. The Board of Trustees has no concern for asset and liability management objectives. b. The Pension Fund has inadequate asset and liability risk management.
   c. The Pension Fund has conducted investment risk management very poorly.
   d. The Pension Fund has very weak controls in conducting asset valuation.

• 27 -
  F. FUNDING SUPPORT RISK
  Funding support is a description of the Pension Fund's ability to meet its obligations to participants until the end of the Pension Fund's operation. The topics assessed in this risk are as follows:

1) Funding Ability
Items assessed include the determination of assets for funding, funding quality, funding ratio, solvency ratio (for PPMP), including surplus/deficit analysis, or the percentage of pension benefit obligations to assets (PPIP).

2) Additional Funding
Items assessed include the employer's financial condition, the employer's business prospects, the employer's commitment and concern for the Pension Fund, and the contribution mechanism to the Pension Fund, viewed from the aspects of contribution collection methods, determination of due dates for contributions, receipt of contributions, and determination of late payment penalties (if any), as well as the Pension Fund's profitability.

The following are general indications of funding support risk for each risk value range:

1. Indication of Pension Fund with Low Funding Risk (0 < NR ≤ 1)
   a. The Pension Fund's funding ability is very adequate. b. The Pension Fund's additional funding is very strong.

2. Indication of Pension Fund with Low-Medium Funding Risk (1 < NR ≤ 1,5)
   a. The Pension Fund's funding ability is adequate. b. The Pension Fund's additional funding is strong.

3. Indication of Pension Fund with Medium-High Funding Risk (1,5 < NR ≤ 2)
   a. The Pension Fund's funding ability is less adequate. b. The Pension Fund's additional funding is less strong.

4. Indication of Pension Fund with High Funding Risk (2 < NR ≤ 3)
   a. The Pension Fund's funding ability is not adequate. b. The Pension Fund's additional funding is not strong.

• 28 -

5. Indication of Pension Fund with Very High Funding Risk (3 < NR ≤ 4)
   a. The Pension Fund's funding ability is very not adequate. b. The Pension Fund's additional funding is very not strong.

• 29 -
  Example Calculation of Pension Fund Risk Level (DPPK PPMP)

Risk Type | Risk Value (C) | Weight (D) | Net Risk Value (E) --- | --- | --- | ---

1. Governance | 0.5 | 15% | 0.01
2. Governance Structure | 0.6 | 15% | 0.02
3. Strategy | 2.7 | 15% | 7.97
   3.1 Inherent Risk (A) | 2.9 | |
   3.2 Management & Control (B) | 2.5 | |
4. Operational | 1.4 | 25% | 0.83
   4.1 Inherent Risk | 1.1 | |
   4.2 Management & Control | 1.6 | |
5. Assets and Liabilities | 1.7 | 30% | 2.51
   5.1 Inherent Risk | 2.9 | |
   5.2 Management & Control | 0.5 | |
   | 100% | |
   Total Net Risk Value (F) | | | 1.83

Funding Support a. Pension Fund Funding Ability | 0.9 | 50% | 0.33 b. Additional Funding | 1.3 | 50% | 1.43
| 100% | |
Total Funding Support Risk Value (G) | | | 1.20

Weight of Net Risk Value and Funding Support = 50% : 50% Overall Risk Value (H) | 1.60

Pension Fund Risk Category: Medium-High

Notes:
A: Inherent risk value
B: Management & control value
C: Risk value = (A+B)/2
D: DPPK PPMP risk weight
E: Net risk value = C * D
F: Total Net Risk Value = Σ (from i=1 to 4) Di * Ci G: Total Funding Support Risk Value = Σ (from i=1 to 2) Di * Ci H: Overall Risk Value = (F * 50%) + (G * 50%)

• 30 -
  Example Calculation of Pension Fund Risk Level (DPPK PPIP)

Risk Type | Risk Value (C) | Weight (D) | Net Risk Value (E) --- | --- | --- | ---

1. Governance | 2.8 | 15% | 9.22
2. Governance Structure | 2.3 | 20% | 5.60
3. Strategy | 2.2 | 10% | 2.34
   3.1 Inherent Risk (A) | 2.3 | |
   3.2 Management & Control (B) | 2.1 | |
4. Operational | 1.7 | 25% | 1.85
   4.1 Inherent Risk | 1.7 | |
   4.2 Management & Control | 1.6 | |
5. Assets and Liabilities | 2.3 | 30% | 7.69
   5.1 Inherent Risk | 2.6 | |
   5.2 Management & Control | 1.9 | |
   | 100% | |
   Total Net Risk Value (F) | | | 2.27

Funding Support a. Pension Fund Funding Ability | 0.3 | 10% | 0.00 b. Additional Funding | 1.6 | 90% | 5.90
| 100% | |
Total Funding Support Risk Value (G) | | | 1.60

Weight of Net Risk Value and Funding Support = 60% : 40% Overall Risk Value (H) | 2.10

Pension Fund Risk Category: High

Notes:
A: Inherent risk value
B: Management & control value
C: Risk value = (A+B)/2
D: DPPK PPIP risk weight
E: Net risk value = C * D
F: Total Net Risk Value = Σ (from i=1 to 4) Di * Ci G: Total Funding Support Risk Value = Σ (from i=1 to 2) Di * Ci H: Overall Risk Value = (F * 60%) + (G * 40%)

• 31 -
  Example Calculation of Pension Fund Risk Level (DPLK)

Risk Type | Risk Value (C) | Weight (D) | Net Risk Value (E) --- | --- | --- | ---

1. Governance | 0.6 | 15% | 0.02
2. Governance Structure | 0.3 | 20% | 0.00
3. Strategy | 0.4 | 10% | 0.02
   3.1 Inherent Risk (A) | 0.5 | |
   3.2 Management & Control (B) | 0.2 | |
4. Operational | 0.5 | 25% | 0.01
   4.1 Inherent Risk | 0.6 | |
   4.2 Management & Control | 0.3 | |
5. Assets and Liabilities | 0.5 | 30% | 0.02
   5.1 Inherent Risk | 0.2 | |
   5.2 Management & Control | 0.8 | |
   | 100% | |
   Total Net Risk Value (F) | | | 0.48

Funding Support a. Pension Fund Funding Ability | - | 0% | - b. Additional Funding | - | 0% | -
| 0% | |
Total Funding Support Risk Value | | | -

Weight of Net Risk Value and Funding Support = 100% : 0% Overall Risk Value (G) | 0.48

Pension Fund Risk Category: Low

Notes:
A: Inherent risk value
B: Management & control value
C: Risk value = (A+B)/2
F: Total Net Risk Value = Σ (from i=1 to 4) Di * Ci

• 32 -
  D: DPLK risk weight
  E: Net risk value = C * D
  G: Overall Risk Value = F

Established in Jakarta on 29 January 2015
EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND OTHER
FINANCIAL SERVICES INSTITUTIONS SUPERVISOR
FINANCIAL SERVICES AUTHORITY,
Signed,
FIRDAUS DJAELANI
Legal Director I
Legal Department,
Signed,
Sudarmaji

APPENDIX II
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 2/SEOJK.05/2015
CONCERNING
PENSION FUND RISK LEVEL ASSESSMENT

• 1 -
  Pension Fund Risk Level Assessment Result Report Pension Fund Name :
  Type : (1) DPPK PPMP (2) DPPK PPIP (3) DPLK
  Assessment Date :
  Report Date :
  A. General Information
  Founders and Co-Founders :
  Name Description Number of Participants
  Board of Trustees :
  Name Position Term of Office
  Supervisory Board :
  Name Position/Representative Term of Office
  Financial Information as of Assessment Date
  Description Value (Rupiah) Ratio per Net Assets Net Assets Investments Normal Contribution Receivables

• 2 -
  Additional Contribution Receivables
  Other Receivables
  Other Assets
  Business Results*
  Funding Ratio (PPMP)
  Solvency Ratio (PPMP)
  Return on Investment (ROI)*
  Number of Participants
  *For the last one-year period since the assessment date

B. Pension Fund Risk Level Assessment Summary
Risk Type | Risk Value | Risk Weight | Net Risk --- | --- | --- | ---
1. Governance | | |
2. Governance Structure | | |
3. Strategy | | |
3.1 Inherent Risk | | |
3.2 Management and Control | | |
4. Operational | | |
4.1 Inherent Risk | | |
4.2 Management and Control | | |
5. Assets and Liabilities | | |
5.1 Inherent Risk | | |
5.2 Management and Control | | |
Total Net Risk Value | | |
1. Funding Ability | | |
2. Additional Funding | | |
Total Funding Support Risk Value | | |
1. Total Net Risk Value | | |
2. Total Funding Support Risk Value | | |
Risk Value | Risk Level | |

• 3 -
  C. Risk Description
  General Description
  Description per Risk Type
  Governance Risk Risk Value: ... Risk Level: ...
  Notes:
  Governance Structure Risk Risk Value: ... Risk Level: ...
  Notes:
  Strategy Risk Risk Value: ... Risk Level: ...
  Inherent Risk Value:
  Notes:
  Management and Control Value:
  Notes:
  Operational Risk Risk Value: ... Risk Level: ...
  Inherent Risk Value:
  Notes:
  Management and Control Value:
  Notes:

• 4 -
  Assets and Liabilities Risk Risk Value: ... Risk Level: ...
  Inherent Risk Value:
  Notes:
  Management and Control Value:
  Notes:
  Funding Support Risk Value: ... Risk Level: ...
  Funding Ability Value:
  Notes:
  Additional Funding Value:
  Notes:

Acknowledged,
Name:
Position:
Prepared by:
Name:
Position:

Established in Jakarta on 29 January 2015
EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND OTHER
FINANCIAL SERVICES INSTITUTIONS SUPERVISOR
FINANCIAL SERVICES AUTHORITY,
Signed,

Copy matches the original
FIRDAUS DJAELANI
Legal Director I
Legal Department,
Signed,
Sudarmaji

APPENDIX III
FINANCIAL SERVICES AUTHORITY CIRCULAR LETTER
NUMBER 2/SEOJK.05/2015
CONCERNING
PENSION FUND RISK LEVEL ASSESSMENT

• 1 -
  FOLLOW-UP PLAN FOR PENSION FUND RISK LEVEL ASSESSMENT

1. Name :
2. Type : (1) DPPK PPMP
(2) DPPK PPIP
(3) DPLK
3. Risk Level Assessment Date :
4. Report Date :
5. Risk Level: 6. Risk Value :
7. Risk Type 8. Risk Cause 9. Follow-Up Plan
10. Target Time 11. PIC
Prepared by
12. Name : 13. Signature
14. Position :
Acknowledged
15. Name : 16. Signature
17. Position :

Guidelines for Filling:

1. Fill in the Pension Fund name.
2. Fill in the Pension Fund type by selecting one from the list provided.
3. Fill in the risk level assessment date which serves as the basis for the follow-up plan.
4. Fill in the date of the signed risk level assessment report.
5. Fill in the Pension Fund risk level according to the risk level assessment results as referred to in item 3.
6. Fill in the Pension Fund risk value according to the risk level assessment results as referred to in item 3.

• 2 -

7. Fill in the risk type as referred to in POJK number 10/POJK.05/2014 concerning Non-Bank Financial Services Institution Risk Level Assessment.
8. Fill in the risk cause.
9. Fill in the plan for various follow-up steps to be taken to reduce the risk level for each risk area.
10. Fill in the target time for implementing the follow-up steps to be taken for each follow-up step, which can be the completion date of the follow-up or the start and end dates of the follow-up if the target time for starting the follow-up is not immediately after the follow-up plan is drawn up.
11. Fill in the unit responsible for implementing the follow-up.
12. Fill in the name of the official who prepared the follow-up plan for the Pension Fund risk level assessment.
13. Fill in the signature of the official who prepared the follow-up plan for the Pension Fund risk level assessment.
14. Fill in the position of the official who prepared the follow-up plan for the Pension Fund risk level assessment.
15. Fill in the name of the Pension Fund Board of Trustees member who handles Pension Fund risk management.
16. Fill in the signature of the Pension Fund Board of Trustees member who handles Pension Fund risk management.
17. Fill in the position of the Pension Fund Board of Trustees member who handles Pension Fund risk management.

Established in Jakarta on 29 January 2015
EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND OTHER
FINANCIAL SERVICES INSTITUTIONS SUPERVISOR
FINANCIAL SERVICES AUTHORITY,
Signed,
FIRDAUS DJAELANI

Copy matches the original
Legal Director I
Legal Department,
Signed,
Sudarmaji