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

To:
Pension Fund Management
In your place.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 4/SEOJK.05/2024 CONCERNING PENSION FUND INVESTMENT VALUATION BASIS

In relation to the mandate of Article 15 paragraph (5) of Financial Services Authority Regulation Number 27 of 2023 concerning the Implementation of Pension Fund Business (State Gazette of the Republic of Indonesia Year 2023 Number 45/OJK, Supplement to the State Gazette of the Republic of Indonesia Number 67/OJK), it is necessary to adjust the provisions regarding the basis for pension fund investment valuation in the Financial Services Authority Circular as follows:

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

1. Pension Fund is a legal entity that manages and runs a program promising pension benefits.
2. Management is the organ of the Pension Fund that has the authority and is fully responsible for the management of the Pension Fund for the benefit of the Pension Fund, in accordance with the purpose and objectives of the Pension Fund and represents the Pension Fund inside and outside the court.
3. Government Securities are securities issued by the Government of the Republic of Indonesia, including state debt securities as referred to in laws concerning state debt securities and Sharia state securities as referred to in laws concerning Sharia securities.
4. Mutual Funds are containers used to collect funds from investor public for further investment in a portfolio of securities by investment managers as referred to in laws concerning the capital market.
5. Medium Term Notes, hereinafter abbreviated as MTN, are debt securities issued by companies with a maturity period of one to five years.
6. Repurchase Agreement, hereinafter referred to as REPO, is a transaction of selling securities with a promise to buy them back at a specified time and price.
7. Bank is a business entity that collects funds from the public in the form of deposits and distributes them to the public in the form of credit or financing and/or other forms to improve the people's standard of living as referred to in laws concerning banking.
8. Stock Exchange is a market organizer in the capital market for exchange transactions.

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II. PENSION FUND INVESTMENT VALUATION BASIS

1. The valuation basis for types of Pension Fund investments is as follows:
   a. on-call deposits at Banks based on nominal value; b. time deposits at Banks based on nominal value;
   c. deposit certificates at Banks based on cash value;
   d. securities issued by Bank Indonesia based on market value; e. Government Securities based on:

1. market value using the last closing price information at the Stock Exchange in Indonesia or fair value determined by a securities price valuation institution that has obtained a business license from the Financial Services Authority or a securities price valuation institution recognized internationally, while still considering the reasonableness of the value used; or
2. amortized acquisition cost, namely when Government Securities have a fixed redemption value and are obtained to be matched with pension benefit payment obligations, or a specific part of the pension program;
   f. shares listed at the Stock Exchange in Indonesia based on market value using the last closing price information at the Stock Exchange in Indonesia; g. corporate bonds listed at the Stock Exchange in Indonesia based on:
3. market value using the last closing price information at the Stock Exchange in Indonesia or fair value determined by a securities price valuation institution that has obtained a business license from the Financial Services Authority or a securities price valuation institution recognized internationally, while still considering the reasonableness of the value used; or
4. amortized acquisition cost, namely when corporate bonds have a fixed redemption value and are obtained to be matched with pension benefit payment obligations, or a specific part of the pension program;
   h. Mutual Funds consisting of:
5. Money Market Mutual Funds, Fixed Income Mutual Funds, Mixed Mutual Funds, and Equity Mutual Funds based on net asset value;
6. Protected Mutual Funds, Guaranteed Mutual Funds, and Index Mutual Funds based on net asset value;
7. Mutual Funds in the form of collective investment contracts with limited participation based on net asset value; and
8. Mutual Funds whose shares or participation units are traded at the Stock Exchange in Indonesia based on market value using the last closing price information at the Stock Exchange in Indonesia;
   i. MTN based on:
9. fair value determined by a securities price valuation institution that has obtained a business license from the Financial Services Authority or a securities price valuation institution recognized internationally, in the event that there is no fair value from a securities price valuation institution that has obtained a business license from the Financial Services Authority or a securities price valuation institution recognized internationally, then using the value from an appraiser registered with the Financial Services Authority; or
10. amortized acquisition cost, namely when MTN has a fixed redemption value and is obtained to be matched with pension benefit payment obligations, or a specific part of the pension program;
    j. asset-backed securities based on fair value determined by a securities price valuation institution that has obtained a business license from the Financial Services Authority or a securities price valuation institution recognized internationally; k. real estate investment funds in the form of collective investment contracts based on:
11. market value, for real estate investment funds in the form of collective investment contracts traded at the Stock Exchange in Indonesia; or
12. net asset value, for real estate investment funds in the form of collective investment contracts not traded at the Stock Exchange in Indonesia;
    l. option contracts and futures contracts of securities traded at the Stock Exchange in Indonesia based on market value using the last closing price information at the Stock Exchange in Indonesia;
    m. REPO based on amortized acquisition cost of securities; n. direct participation in Indonesia based on value determined by an appraiser registered with the Financial Services Authority; o. land and/or buildings in Indonesia based on value determined by an appraiser registered with the Financial Services Authority; p. regional bonds based on:
13. market value using the last closing price information at the Stock Exchange in Indonesia or fair value determined by a securities price valuation institution that has obtained a business license from the Financial Services Authority or a securities price valuation institution recognized internationally, while still considering the reasonableness of the value used; or
14. amortized acquisition cost, namely when regional bonds have a fixed redemption value and are obtained to be matched with pension benefit payment obligations, or a specific part of the pension program; and
    q. infrastructure investment funds in the form of collective investment contracts based on net asset value.

2. Government Securities, corporate bonds listed at the Stock Exchange in Indonesia, MTN, and regional bonds valued based on amortized acquisition cost must be supported by written documents from the Management showing the purpose of placing Government Securities, corporate bonds listed at the Stock Exchange in Indonesia, MTN, and regional bonds to be matched with pension program obligations or a specific part of the pension program.

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This copy is in accordance with the original
Director of Legal Development
Legal Department
Aat Windradi

3. Valuation of the following types of investments:
   a. direct participation in Indonesia; and/or b. land and/or buildings in Indonesia, is conducted at least once in 3 (three) years.
4. Provisions regarding the basis for investment valuation as referred to in item 1 apply in the calculation of the compliance of all Pension Fund investments against provisions of legislation concerning the implementation of Pension Funds.
5. Provisions on the basis for valuation of types of Pension Fund investments as referred to in item 1 and item 2 also apply to types of investments using Sharia principles.

III. CLOSING PROVISIONS

1. At the time this Financial Services Authority Circular takes effect, Financial Services Authority Circular Number 9/SEOJK.05/2016 concerning the Basis for Pension Fund Investment Valuation, Form and Structure, and Method of Submission of Annual Investment Reports is repealed and declared invalid.
2. Provisions in this Financial Services Authority Circular shall take effect on July 1, 2024.

Determined in Jakarta on April 5, 2024
EXECUTIVE HEAD OF INSURANCE, GUARANTEE, AND PENSION FUND SUPERVISOR FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, OGI PRASTOMIYONO

signed signed