Cash Flow Projection Analysis of a Defined Benefit Pension Fund Under Membership Freezing Conditions in Indonesia

Kristiani Tri Lestari; Zaäfri Ananto Husodo

doi:10.59261/inkubis.v8i2.365

Authors

Kristiani Tri Lestari Universitas Indonesia
Zaäfri Ananto Husodo Universitas Indonesia

DOI:

https://doi.org/10.59261/inkubis.v8i2.365

Keywords:

Defined Benefit Pension Fund, Membership Freezing, Projected Cash Flow, Sustainability

Abstract

Background: Defined Benefit Pension Funds (DPPK PPMP) in Indonesia face funding sustainability risks as frozen membership reduces contribution inflows while long-term pension obligations persist.

Objective: This study evaluates the long-term cash flow sustainability of DPPK PPMP with frozen membership, identifies key funding determinants and deficit points, and proposes mitigation strategies.

Methods: A descriptive-analytical quantitative approach was applied to 18 DPPK PPMP with frozen membership using financial statements, actuarial reports, and OJK audit results from 2023–2025. Cash flows were projected through 2062 under fixed actuarial assumptions and no new participants or operational costs. Funding ratios, net cash flows, and heatmaps were analyzed.

Results: Pension Funds F and P entered negative cash flow in 2027, while B, C, L, and O maintained funding ratios above 100% through 2062. Participants aged 56–75 represented 65% of membership, with retirees reaching 95% in some funds. Only four funds remained financially resilient, while the remainder faced high to very high funding risk. Sustainability was mainly determined by initial asset adequacy, participant demographics, and investment returns.

Conclusion: Most DPPK PPMP with frozen membership face long-term funding deficits. Regular cash flow projections, strengthened Asset Liability Management, and funding recovery plans are essential to ensure sustainable pension payments.

Downloads

Download data is not yet available.

References

Abdul Rahman, M. I., & Lau, W. Y. (2024). Pension at Stake: Issues and Solutions to Defined Benefit Pension Scheme in Malaysia. In Pension at Stake: Issues and Solutions to Defined Benefit Pension Scheme in Malaysia. https://doi.org/10.1007/978-981-97-2324-9

Alirzayev, E. (2025). Contemporary issues of financial sustainability in the pension system in Azerbaijan. Rivista Di Studi Sulla Sostenibilità-Review of Studies on Sustainability-Open Access 2 Thematic Issue.

Amaglobeli, D., Chai, H., Dabla-norris, E., Dybczak, K., Soto, M., & Tieman, A. F. (2019). The Future of Saving: The Role of Pension System Design in an Aging World. IMF Staff Discussion Note, 19/01.

Bernardino, W., Falcão, R., Jr., J., Ospina, R., de Souza, F. C., & Correia, J. J. A. (2025). A study of asset and liability management applied to Brazilian pension funds. European Journal of Operational Research, 322(3). https://doi.org/10.1016/j.ejor.2024.11.016

Chohan, U. W. (2023). Pension Fund Regulation and Governance. In Global Encyclopedia of Public Administration, Public Policy, and Governance. https://doi.org/10.1007/978-3-030-66252-3_3474.

El Moutaki, N. (2026). The sensitivity analysis of multistate pension projections based on a vec-permutation approach. Statistics, Optimization & Information Computing, 15(3), 1708–1740.

Jang, C., Clare, A., & Owadally, I. (2024). Liability-driven investment for pension funds: stochastic optimization with real assets. Risk Management, 26(3). https://doi.org/10.1057/s41283-024-00141-9

Koval, N., Priamuhina, N., & Zhmurko, I. (2020). ANALYSIS OF ECONOMIC-FINANCIAL EXPERIENCE OF THE WORLD COUNTRIES IN THE SYSTEM OF PENSION INSURANCE. Baltic Journal of Economic Studies, 6(1). https://doi.org/10.30525/2256-0742/2020-6-1-1-8

Marcaillou, P.-N. (2016). Defined Benefit Pension Schemes in the UK: Asset and Liability Management. . Oxford University Press.

Miles Matthew, B., Michael, H. A., & Johnny, S. (2014). Qualitative data analysis: A methods sourcebook. Sage Publications.

Moreira, L., Santos, I. L. dos, & Gonzalez, P. H. (2026). Portfolio Optimization for Pension Purposes: Literature Review. Journal of Economic Surveys, 40(1). https://doi.org/10.1111/joes.12702

Murari, K. (2022). Risk-adjusted performance evaluation of pension fund managers under social security schemes (National Pension System) of India. Journal of Sustainable Finance and Investment, 12(4). https://doi.org/10.1080/20430795.2020.1857635

Nádasi, L. S. and S. K. (2026). Balancing Sustainability and Well-Being: A Multivariate Analysis of European Pension Regimes . Administrative Sciences, 16(3).

OJK. (2026, Maret 10). OJK tegaskan penguatan sistem dana pensiun nasional. Otoritas Jasa Keuangan. https://www.ojk.go.id/id/berita/publikasi/Pages/OJK-Tegaskan-Penguatan-Sistem-Dana-Pensiun-Nasional.aspx

OJK. (2026, April 13). Jaga keberlanjutan pembayaran manfaat, OJK dorong dana pensiun terapkan strategi ini. Kontan. https://keuangan.kontan.co.id/news/jaga-keberlanjutan-pembayaran-manfaat-ojk-dorong-dana-pensiun-terapkan-strategi-ini

OECD. (2025). Addressing the challenges for asset-backed pensions in Indonesia. OECD Publishing. https://doi.org/10.1787/5d4c3b2a-en

Ring, P., Lowe, J., & Luu, L. (2024). Global pension challenges: Pensions, saving and retirement in the twenty-first century. In Global Pension Challenges: Pensions, Saving and Retirement in the Twenty-First Century. https://doi.org/10.4324/9781003307280

Shim, H., Kim, S., & Choi, Y. H. (2022). Sustainability of pensions in Asian countries. Communications for Statistical Applications and Methods, 29(6), 679–694. https://doi.org/10.29220/CSAM.2022.29.6.679

Syam Budi Bakroh, D., & Hiilamo, H. (2025). The Role of Pension Benefits in Food Consumption Disparities and Nutrition Inadequacy Among the Elderly in Indonesia. SAGE Open, 15(3). https://doi.org/10.1177/21582440251363688

Weber, B., Staub-Bisang, M., & Alfen, H. W. (2016). Infrastructure as an asset class: Investment strategy, sustainability, project finance and PPP. In Infrastructure as an Asset Class: Investment Strategy, Sustainability, Project Finance and PPP. https://doi.org/10.1002/9781119226574

Zaki Khorasanee, M. (2002). A Cash-Flow Approach to Pension Funding. North American Actuarial Journal, 6(1). https://doi.org/10.1080/10920277.2002.10596034

Zhao, Z., & Sutcliffe, C. (2024). Why are pension schemes frozen, and how does a freeze affect the Employer’s risk? International Review of Economics and Finance, 94. https://doi.org/10.1016/j.iref.2024.103393