Takaful News - Indonesia: Green light given for Islamic pension funds
Source: Middle East Insurance Review | May 2016
Insurers and asset managers will be allowed to market Islamic retirement plans and have the option of converting existing funds into Shariah vehicles, according to a proposal by the Financial Services Authority (OJK).
The proposal, released in March, did not provide an implementation date. With some of the lowest financial literacy levels among major Asian economies, Indonesia has just US$16 billion of private pension fund assets, said Bloomberg.
Shariah-compliant retirement plans will deepen the Islamic finance market in Indonesia by spurring sukuk sales, said PricewaterhouseCoopers. This will aid growth in Islamic banking assets, which slowed to 4% in 2015 from levels slightly lower than 50% at the beginning of the decade.
According to UN forecasts, the population of Indonesia, which has the most Muslims in the world, will grow to 322 million by 2050, while those over 60 will hit 62 million.
Indonesian private pension fund assets rose 11% to IDR211.95 trillion (US$16 billion) in January from a year earlier, according to OJK’s data.
IDR 1,000 = US$0.08