LPEM: Pension funds have the potential to become financial sector contributors to GDP

The potential for increasing the contribution of the financial sector to GDP (Gross Domestic Product or GDP) can still be developed, one of which is through pension funds

Jakarta (Armfalcon.com) – The Institute for Economic and Social Research (LPEM) Faculty of Economics and Business, University of Indonesia (FEB UI) said that pension funds have the potential to become a contributor from the financial sector to Indonesia’s Gross Domestic Product (GDP).

Deputy Main Director of LPEM FEB UI, Jahen Fachrul Rezki, explained that this potential comes from Indonesia’s demographic conditions.

“Potential increase in the contribution of the financial sector to GDP (Gross Domestic Product or GDP) can still be developed, one of which is through pension funds,” Jahen said during a press conference for the Indonesia Financial Group (IFG) in Jakarta, Tuesday.

He explained that this potential comes from Indonesia’s demographic conditions. Currently, Indonesia is in the demographic bonus phase, when the productive age population is greater than the non-productive age population.

This means that in 2045, the target year for the vision of Indonesia Emas 2045, there will be many people entering retirement age.

With more and more people entering retirement age, the performance of pension funds will increase, so that the contribution of pension funds to GDP will be even greater.

“We estimate that insurance’s contribution to GDP in 2045 will be around 3-5 percent. So, substantially, there are still many benefits that we can get, “explained Jahen.

Even so, he said there are still many people who do not understand well the protection of pension funds from insurance. Therefore, efforts are needed to encourage the level of public financial literacy, especially for insurance products.

This is what underlies LPEM in collaboration with IFG to organize a national conference that collects scientific studies related to insurance and pension funds. The selected scientific studies are expected to be a solution for the insurance and pension fund sectors.

“We agreed to collaborate because the topic of insurance is important, because it involves many people’s lives. But, the contribution to GDP is low, because maybe the issue is still lacking in academics. So, we hope that there will be many studies from this conference that can be used for insurance and pension funds,” he said.

The IFG national conference presented 66 scientific studies that discussed the volatility, uncertainty, complexity, and ambiguity of the insurance and pension fund sectors. In addition, selected scientific studies also discuss digital opportunities and innovations that can be applied to insurance and pension funds.

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source: www.antaranews.com

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