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Investigating the Efficiency of Indonesian Employee Pension Funds

Author

Listed:
  • Pascalis Seran
  • Usil Sis Sucahyo
  • Apriani Dorkas Rambu Atahau
  • Supramono Supramono

Abstract

This study aims to examine the performance of Indonesian employee pension funds based on technical and scale efficiencies. Our sample is 40 Indonesian pension funds in the 2011-2017 period, resulting in 280 firm-year observations. Data Envelopment Analysis (DEA) is used to measure pension funds’ efficiency levels. The results show Indonesian employee pension funds generally cannot operate efficiently. However, based on their size, large pension funds exhibit better technical efficiency levels than small pension funds. Conversely, small pension funds perform better in scale efficiency. Other findings document that, from the ownership perspective, state-owned enterprise (SOE) pension funds exhibit better technical efficiency levels than non-SOE ones. This study also proposes the managers of Indonesian employee pension need to improve their pension fund performance by reducing operational and investment costs and engaging in greater investment diversification.

Suggested Citation

  • Pascalis Seran & Usil Sis Sucahyo & Apriani Dorkas Rambu Atahau & Supramono Supramono, 2022. "Investigating the Efficiency of Indonesian Employee Pension Funds," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 25(83), pages 74-87, June.
    • Handle: RePEc:rej:journl:v:25:y:2022:i:83:p:74-87
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    pension funds; technical efficiency; scale efficiency; data envelopment analysis;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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