T

he Financial Institution Pension Fund (DPLK) under state lender Bank Mandiri has won a financial deal to manage the retirement benefits of West Sumatra-based cement producer Semen Padang, a subsidiary of publicly listed state cement company Semen Indonesia.

With the new deal, Mandiri DPLK will manage Semen Padang'€™s employee retirement benefits and severance funds, worth more than Rp 30 billion, for the latter'€™s 1,475 employees.

Bank Mandiri institutional banking director Abdul Rachman said the partnership was part of the integrated financial and banking services provided by the bank for Semen Padang, such as payroll, fund placement and credit card services.

'€œWe want to provide an added value of financial management for our customers. The retirement benefit program is important because employees can feel that they have assurance in old age, which can prompt engagement and loyalty,'€ he said in his speech during the signing ceremony at the bank'€™s headquarters in Jakarta.

In order to push business growth, Abdul said the pension fund would continuously strengthen its quality and distributor management as well as human resources capacity.

Bank Mandiri DPLK recorded Rp 432.71 billion (US$36.03 million) in total assets under management (AUM) by the end of September, more than double the Rp 176.25 billion in the same period last year.

The pension fund offers various retirement benefits programs, including the Pension Program for Severance Compensation (PPIP), for which the amount of retirement benefits is based upon the accumulation of fixed premiums and top-up dues paid by an employee as well as the portion of placements on investment instruments.

Bank Mandiri DPLK finance and general director Rudi Rahman said his institution set a target of booking Rp 1.1 trillion in total AUM this year.

Rudi said the institution invested the assets in various financial instruments, including the money market, stocks and fixed income, such as time deposit in banks. However, he declined to provide details and percentages.

Rudi said further that his institution expected to focus more next year on approaching oil and gas companies, which had been suggested by the Financial Services Authority (OJK).

Currently, the pension fund serves companies from various sectors, namely plantations, health and automotive, Rudi said. Next year, he said, his institution targeted serving around 25 to 30 new companies, which would double its current number of customers.

'€œWe are currently focusing on campaigning and raising public awareness on financial literacy, including about the importance of retirement benefits,'€ he added.

Also on Tuesday, Semen Padang finance director Benny Wendry said he was convinced that the Bank Mandiri DPLK partnership would enable the cement producer'€™s pension funds to receive investment returns above the inflation rate each year.

Benny said Semen Padang would also offer the retirement benefit program to the company'€™s 200 new recruits, who were currently undergoing training.

According to Benny, the benefits from the partnership would improve the performance of employees in the company'€™s daily operations. Semen Padang is currently in the early stages of constructing a Rp 3.8 trillion facility in Indarung, Padang, West Sumatra, he added.

Benny said the company expected to complete the development in the third quarter of next year. The facility is expected to produce 3 million tons of cement per year, adding to the company'€™s current total capacity of 6.8 million tons.

'€œThe total investment for the facility is Rp 3.8 trillion. Bank Mandiri is lending Rp 1.9 trillion to support the construction, while the rest comes from our own cash,'€ he said.

Benny said further that the new facility'€™s cement production would help domestic supplies in the western part of the country, especially in Jakarta, Banten and Sumatra.

Aside from the Indarung facility, he said Semen Padang was currently in the process of completing a Rp 200 billion cement grinding mill with a capacity of 900,000 tons, which would start operations in December this year. (gda)