Opportunities and Challenges in Developing Islamic Pension Funds in Indonesia

Abstrak

Despite the rapid development of the Islamic financial sector in Indonesia, the development of Islamic pension funds is way behind those of the other Islamic financial sectors. This study aims to explore the opportunities and challenges faced by Indonesian Islamic pension funds. Utilizing a qualitative research method, the study conducted Focus Group Discussions with 23 large pension funds spread across five big cities in Indonesia. It was revealed that opportunities and prospects for developing Islamic pension funds in Indonesia are relatively good. However, various internal and external challenges were found, such as a lack of knowledge; the weak commitment of founders; lack of quality human resources; relatively unfavorable tax treatment; limited investment instruments; competition with government pension schemes; and public literacy problems.  Therefore, two broad strategies are recommended to develop the Islamic funds, namely the provision of direct/indirect incentives to market players, and literacy programmes to targeted/priority groups. These strategies are expected to encourage and accelerate the growth of Indonesia's Islamic pension fund industry in the future.JEL Classification: H55, H75, J32How to Cite:Kasri, R. A., Haidlir, B. H., Prasetyo, M. B., Aswin, T. A., Rosmanita, F. (2020). Probability of Paying Zakat from Micro Financing Project Return. Etikonomi: Jurnal Ekonomi, 19(2), 311-322. https://doi.org/10.15408/etk.v19i2.16284.