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08 Improvement of Governance and

Allocation of Investment Assets

(Case Study on AKM Pension Fund)

Elisabeth Maha, Budi Frensidy

ABSTRACT: This research has two objectives which are evaluating the governance and process of investment asset
allocation carried out by the AKM Pension Fund. This study used interviews and document analysis. The results of
this study show that the implementation of the principles of transparency and accountability have not following the
principles of good pension fund governance set out in POJK. AKM Pension Fund has not determined the proportions,
performance standards, and guidelines for rebalancing on the planning stage of its asset allocation. On the
implementation stage, AKM Pension Fund has not taken steps to find a portfolio that can achieve the maximum return
rate for each particular risk level and to find the optimal asset assortment.

Keywords
pension fund, governance, asset allocation

1. INTRODUCTION
One of the pension fund governance problems that have occurred is the alleged corruption in the management of
pension funds at PT Pertamina (Persero) in 2014-2015 through the share investment placement which resulted in state
finance fatality. The implementation of good pension fund governance is vital considering that the objective of pension
fund asset management is to provide funding for pension benefit obligations.

The Organization for Economic Cooperation and Development introduced the G20 / OECD Principles of Corporate
Governance at the G20 Leaders Summit 15-16 November 2015. The principles of OECD governance are valuable for
assisting policymakers to evaluate and improve legal frameworks, regulations in addition to institutions that can
provision economic efficiency, sustainable growth, and financial stability. The OECD Principles of Governance explains
that corporate governance is a set of affiliations between company management, the board of directors, shareholders,
and stakeholders (OECD, 2015). Corporate governance correspondingly provides a structure for setting company goals,
ways to achieve goals, and determining performance monitoring. The implementation of good governance in pension
funds is also regulated in the Financial Services Authority Regulation (POJK) Number 15 / POJK.05 / 2019 concerning
Pension Fund Governance. This POJK regulates the implementation of the duties and responsibilities of the Employer
Pension Fund (DPPK), the Executive Board, Supervisory Board, and Sharia Supervisory Board (DPS); implementation of
duties and functions of internal control of the Pension Fund, implementation of compliance functions, internal auditors
and external auditors; implementation of risk management including internal control systems, and implementation
of information technology governance, application of remuneration policies, pension fund business plans, and
transparency of pension fund financial and non-financial conditions. Besides that, OJK has released the regulations as
the manual of investment instrument for pension fund as in POJK Number 29/POJK.05/2018.

Law (UU) Number 11 of 1992 divides pension funds into two types, that are Employer Pension Funds (DPPK) and
Financial Institution Pension Funds (DPLK). Based on the Financial Services Authority (OJK) Pension Fund Statistics as
set out in Figure 1, the growth in net assets of pension funds from 2014 to 2019 has increased. The total net assets of
pension funds increased by 50.20% from Rp192.9 trillion in 2014 to Rp289.74 trillion in 2019. The graph of growth in net
assets of pension funds in 2014-2019 is as follows:

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