THE ISLAMIC LAW PERSPECTIVE OF UNIVERSITAS MUHAMMADIYAH SURAKARTA PENSION FUND MANAGEMENT

Pension fund is one of the non-bank financial institutions that manages and implements program to generate retirement benefits. Pension fund is one of potential resources of fund which operation can be based on either conventional or Islamic principle. This research will focus on the type of contracts used by Universitas Muhammadiyah Surakarta (UMS) Pension Fund whether its operation conforms the requirements of shariah princple or not. This research aims to know, elaborate and evaluate the conformity of shariah principle in the UMS Pension Fund operation. The type of research carried out here is qualitative with the descriptive evaluative approach. The data is obtained through observation, documentation and interview. The result of the research shows that the contracts used in managing the fund by UMS Pension Fund are muḍārabah, wakalah, ijārah and hibah. Muḍārabah contract is used between the pension fund and the participants as well as between pension fund and investee. Wakalah contract is used between the employer which is UMS in this case and the pension fund. Meanwhile, hibah contract is used between employer and participants.


INTRODUCTION
Pension fund has many aspects embedded within it, they are social, psychology and economic aspect. An individual or employee will continously struggle to strengthen or sustain their economic welfare right along with their increasing age. This can be achieved through enrolling at many financial programs such as individual saving, life insurance or joining as member of Pension Fund run by private organization or by government. Welfare during retirement of society or employees in general related to the social and psychological stability because the certainty of peace of life in the retirement days will affect the behavior of society, both in the company and in the wider community. In addition, the development of pension fund institutions themselves is also one of the social outcomes and economic growth of the community, especially modern companies (Tunggal, 1996).
One of the pension fund institutions that manages funds as long-term savings collected specifically for the purpose of providing benefits to employees when they reach retirement age is the Pension Fund of Universitas Muhammadiyah Surakarta (we will call it as PFUMS hereafter) which is located at Siti Walidah Main Building, Muhammadiyah University, Surakarta. The Pension Fund was formed by the Universitas Muhammadiyah Surakarta with the decision of the Chancellor of that university.
Pension Fund of Universitas Muhammadiyah Surakarta provides guarantees to employees of the Muhammadiyah University of Surakarta after retirement so that they are more productive and loyal during their working age. In that state, they will not worry about their fate at retirement. However, it is important to see whether the management of the PFUMS is in accordance with sharia or not. In addition to that, it is also important to investigate whether PFUMS involves usury and conventional practive during its investment which is prohibited by Islam.
In the view of Islam, an activity that raise and attracts benefit. Nevertheless whether the benefit is in accordance with the principle of Islam or only gives benefit for some parties while harming another party. For the case of pension fund, there are two types of it, namely conventional pension fundsand Islamic pension fund. For the conventional pension fund, it involves usury and conventional financial instruments during its investment process.
Of course such management is prohibited by Islamic religion. Meanwhile, the management of Islamic pension fund always try to avoid the interest and any conventional financial instruments.
Based on the background described above, the are several issues this research aims to investigate. First, this study is focusing on what type of contract is used by the management of PFUMS. This first aim is followed by the Islamic Law perspective on the management of PFUMS which constitutes as the second focus in this research. By carrying out field research with the descriptive qualitative approach, this paper will try to figure out the aforementioned issues concerned in this topic.

LITERATURE REVIEW
Pension Fund is not something that recently appears in modern day. It has been practiced far before 21th century. Pension fund is one of the non-bank financial institutions in Indonesia that has activities to guarantee the welfare of the community both for pension and accident purposes. The exact definition of Pension Fund can be seen in Chapter I Article 1 in Law Number 11 of 1992 on Pension Funds which states, "Pension Funds are legal entities that manage and run programs that promulgate retirement benefits." In a more general definition, pension a decision made to prepare a number of funds or build financial planning so that the funds can be used to support a person during his retirement age. This means that when a retirement period comes, a person will still get financial income sourced from the pension fund. By having this fund, that person could do various activities that help him to get rid of his boredom since usually an employee was used to have full day activities in the office during his working period (Fahmi, 2014). Meanwhile, pension benefits mean periodic fund distribution paid to participants within time and through mechanism specified by article 1 number 1 and 9 at Pension Fund Law (Wahab, 2005).
In a more specific definition in the regard of Islamic Pension Fund, it has quiet different meaning. Mardani (2015) says that Islamic Pension Fund is defined as pension fund managed and run based on shariah principle. In other word, it must be free from forbidden elements in Islam such as interest, brabing, gharar (uncertainty), maisir (speculation) and void things.
The underlying Islamic principle for the practice of pension fund can be found at Chapter An-Nisa verse 9, "And let those [executors and guardians]  There are several studies that has investigated pension fund of any institutions. For example, Meilani (2015) in her undergraduate thesis investigated the pension fund management of Bank Muamalat Indonesia. In that study, she explained the contractual form between the first party (i.e. the customer) with Bank Muamalat takes the mudarabah mutlaqah type of contract.
Unfortunately, this makes the study conducted by her focuses too much on the mudaraba system from its definition until its implementation. The evaluation on the management of Bank Muamlaat pension fund is barely touched. Here, the main focus is not on the islamiw law perspective, but more towards mechanism of the muḍāraba in Bank Muamalat pension fund.
Another study is done by Bukit (2012) for his undergraduate thesis as well. The context of the study was pension fund of Pertamina with the emphasis on the accountancy side. Thus, the research investigates the procedure and pension accountancy treatment at the Pertamina pension fund to see whether the accountancy standard is well applied or not. It is clearly seen from the study that she tried to seek the confomity between PSAK (accountancy standard) and the accounting application at Pertamina. Hasibuan (2017) also have done similar research yet in a more general way. He made theoritical comparison between conventional pension fund management and the Islamic one. In the conventional practice for pension fund management, they invest in the instruments such as bonds including the Indonesia sovereign bond where the interest becomes one of its core source of profit. Meanwhile, the Islamic pension fund management uses the Islamic instruments such as sukuk, islamic mutual fund and Islamic stocks.
One other study was conducted by Rifanto (2017) who focuses more on the determinant of factors affecting customers intention in using pension fund instruments. In his study, the researcher analysed the impact of service, promotion and products towards the intention of customers in the context of Bank Muamalat Yogjakarta. The difference between this conducted research and the one that will be conducted here is that the initial contributes in the field of customer intention rather then Islamic legal aspect.
From the previous studies above, it is interesting to discuss the management of pension fund from Islamic law perspective apart from being it is not yet covered on the studies above.

METHODOLOGY
The approach taken in this study is descriptive-evaluative approach. Descriptive research is a systematic, factual and accurate description or illustration of phenomenon or relationships between phenomenons being investigated (Suprayogo and Tobroni, 2001). Meanwhile, the evaluative approach is every activity of collecting data or information that will be compared and drawing conclusion afterward. This conclusion is called evaluation (Arikunto, 1992). Evaluative research is basically focused on the final recommendation which confirms that an evaluation object can be maintained, repaired or even dismissed in line with the data obtained.
This research was conducted to obtain data and produce conclusions on the practice of PFUMS with the regard on the evaluation of contracts used in the management. The type of data that will be observed will be both the primary and secondary data. The primary data is gathered through interview with the director of PFUMS. The author also observes each individual and the events that exist in the research location as well as making direct observation on the management of PFUMS regarding the used contract. The secondary data is obtained from the available literatures and documentations related to the topic of our interest. The data collection method used is the first observation, interview and documentation. Data analysis was carried out by means of the author searching for data by conducting review of books, literature, scientific papers and data that have relationship with the problem being studied.
For the research purpose, we limit the conformity of PFUMS practice towards fatwas issued by DSN-MUI. Neglecting this limitation causes bias in interpretation since there are enormous views regarding the muamalah practice. One mazhab might differ with another even though they embarked from similar evident (dalil) because the analysis tool (usul fiqh) is also different. Therefore, we stick on the fatwa issued by the highest authority in Indonesia for this field.  (Sam, et al., 2014).

DISCUSSION AND RESULT
General Overview on the PFUMS UMS Pension Fund channeled the investment into three main categories. The categories are time deposit, sukuk and land purchase. The report of those three activities can be seen at the table below.  Meanwhile, sukuk investment done by PFUMS counts only for roughly one-third of total time deposit investment and fourth of whole investment (see table 4). The reason might include the difficulty on managing sukuk compared to time deposit to the extend that it needs human resource with deep understanding on financial market. In addition to that, sukuk issuance in Indonesia is still quite low compared to other region. At the table 2 above, it can be obviously seen that SBSN PBS 012 counts for almost half of total sukuk investment (42,31%) while the smaller amount is channeled to both Bank Nagari and sukuk PT. Timah. The last channel of investment is land purchase. In general, land purchase is considered as one of investment options on the basis that the price of land will always increase in the future.
However, the fact that PFUMS only make investment of roughly one-sixth of whole investment indicates some possible reasons.
The reason includes the availability of land which can be purchased by PFUMS. As it is obvious, it is difficult to find piece of wide land which is promising to get it sold at the far future.

Fund
Every contract and transaction has its own pillar and condition in order to make it to be valid. For this research purpose, we will first elaborate shortly on the pillar and condition of the contracts used in the management of pension fund.
a. Wakalah There are some important elements in wakalah which are the parties including the delegator and the delegate, as well as the subject matter being delegated. For the contracting parties, they must be in full capacity of their act, being lawful and and mature. The delegate also must be able to do the matters being delegated. Meanwhile, the subject matter itself must be clear and not in the contrary with shariah principle.

b. Mudarabah
The pillars and conditions for mudarabah are as following.
Fund provider and fund manager must be lawful, mature and act on their free will. The offer and acceptance must be expressed to show their intention in forming the contract.
The capital provided by fund owner can be in form of cash or asset but not in debt. The profit must be shared between parties as agreed in the contract while the financial loss is borne by the fund owner. The business activity as the exchange of the capital provided must be legal.
c. Ijarah In ijarah, both parties must do the rental activity on their own concern. The parties involved also must understand fully the usage of subject matter to avoid dispute. The subject matter also must be ensured its usefullness from both shariah and economic perspective. The subject matter must also be able to get deliverd during contracting time. Since ijarah concern most on the benefit rather than on the tangible asset, thus the benefit must not be haram.

d. Hibah
Hibah requires the person must have the subject matter he wants to grant. The grant giver must have full capacity on his asset and wealth, mature, lawful and act on his willingness.
Meanwhile, the grantee must really be in existence. Therefore, if the existence is still uncertain such as womb, the grant becomes void. In case the grantee exists during granting time but in the insane condition, the grant will be accepted and managed by its guardian (wali), or educator even though the person is stranger for that insane grantee (Sabiq, 1987).
While the above explanation is for the usual hibah, there is hibah that come under spesicif condition, called as hibah with condition (hibah bil sharth). Hibah is actually done without any expectation of reward, whether in the form of another hibah, gift, charity or any other means. However, hibah can be tied upon condition such as if a person says, "I will give you a motorcycle if you pray five times in mosque for 10 days." In this type of hibah, the giver of hibah might ask back the grant if the condition is not fulfilled. In one of hadith mentioned that a person gived something to Rasulullah by requesting some conditions that is Rasul must give some sort of things Rasul likes (Suhendi, 2002).
The Pension Fund is an alternative way to provide welfare guarantees to employees during the retirement period. The welfare guarantee is not only for employees who get retired, but also their families get that welfare. The main thing that has to be emphasized here is that the management of the Pension Fund must be in accordance with sharia principles and in accordance with PFUMS itself uses several contracts in their transaction. The details are as following: a. All the parties involved are the Head of University as the "Employer" while UMS employee as the "Participant".
PFUMS here acts as the "Manager" of the pension fund, the real sector as the "Investee" and the retired UMS employee as the "Recipients" of pension benefits. Shariah stipulates that the condition for this person is that he must be the legal owner who are allowed to act as he pleased over his ownership. In this case, the person who delegates is the Employer who acquire full ownership on the wealth.
In addition to that, the person who makes delegation must be mukallaf (eligible to be responsible from Islamic point of view) and mumayyiz (able to distingusih between good and bad thing). Here it is obvious that the Employer is mukallaf and mumayyiz.
Second, the delegation (wakīl) must be lawful and able to do the task assigned to him. In this case, the manager of PFUMS who accepts the delegation mandate is confirmed to be lawful and accepts the trust given by the Employers to the as the Manager.
Third, the matters being delegated must be known by the delegated party and doesn't go against shariah principle.
In this case, PFUMS as the Manager understand well the mechanism, including the wealth of Pension Fund and regulations that have been passed. In addition to that, there is no element of riba and gharar within it. The Pension Fund also gives benefit for all parties. The next pillar of mudarabah is about the profit which is the surplus of the initial capital. After the participants give the premium 5% of their monthly salary, PFUMS will manage and invest it until it grows in number. Afterwards, the profit must be splitted between both parties and cannot be given to only one party. The profit is distributed equally according to the agreed contract of mudarabah.
One other pillar is the type of business run by manager in exchange of the capital paid by fund owner. There are some conditions that need attention. The business activity is an exclusive right of the manager without any interruption from the fund owner. Howerver, fund owner has the right of supervision.
Fund owner must not limit manager's activity that might hinder the goal of the mudarabah contract formation which is the profit. The manager also must not do things contrary to the shariah principle in their mudarabah activity. Therefore, the type of activity and business is an exclusive right of fund manager without any interruption from fund owner while still giving the owner right of supervision to ensure that the activities do not breach Islamic law and teachings.
e. The contract used between PFUMS and Investee is mudarabah and ijarah contract. In mudarabah contract, PFUMS invests the contribution of business founder and the participants' fund on Islamic financial institutions. The investment is in the form of deposit so that any sum of money accumulated by PFUMS can grow and given back to the respective owner later on. The profit earned will be disbursed through hibah or based on the profit sharing margin. This thing can be investigated from the pillars and conditions of mudarabah.
The first pillar of mudarabah is that all parties must be lawful. In this regard, PFUMS acts as the fund owner while Investee as the fund manager. Second pillar is the offer and acceptance that must be pointed out by all parties to express their intention in concluding contract. In this regard, PFUMS and Investee will make written contract agreement by priortizing the benefit (maslahah) for both parties. The third is capital which is sum of money or asset given to the fund manager for business purpose. In this regard, PFUMS invests its money to Islamic financial institution for deposit where the profit will be calculated on the basis of profit loss sharing. Fourth condition is the profit which is surplus of initial capital. Afther the money invested by PFUMS grows, the profit obtained from the deposit must be distributed according to the agreement which is the profit loss sharing under mudaraba model. The next pillar of mudaraba is the business type as the exchange of given capital. Fund manager must obtain full and exclusive authority in managing the fund given by PFUMS as the fund owner. PFUMS must stop themselves in intervining in the management of the fund.
However, PFUMS has right of supervision to ensure that the management avoids activitites prohibited by sharia.
For the ijarah contract, PFUMS invests up to 30% of its money in the corporate sukuk, particularly to the PT. Angkasa Pura, PT. Timah, Bank Nagari, PLN and some sovereign sukuks i.e.
PBS12 and SR008. PFUMS as the sukuk holder who gives fund to the sukuk issuer so that the issuer can expand their business using the proceed of their sukuk. The issuer in the other hand must pay specific amount of money to the holder as the fee of ijarah while paying back the initial capital of sukuk at maturity time. PFUMS also uses mudaraba contract in investing their money through mudarabah sukuk i.e. to BRI Islamic. PFUMS as the sukuk holder gives fund to BRI Islamic as sukuk issuer for the purpose of funding specific project run by BRI Islamic. The profit will be distributed periodically according to the profit loss sharing agreement made by both parties.
f. In order to do the investment or non-investment activities, PFUMS is allowed to make agreement with other party under Islamic principle which also must be not contrary to the laws enacted by respective jurisdiction. In this regard, PFUMS makes investment in the form of deposit, sukuk and land purchase investment which is in line with shariah principle.

Analysis from Islamic Perspective
In general, the contract applied by the UMS pension fund conforms Sharia principles. Therefore the transactions applied are lawful since it fulfills the pillar and conditions of wakalah, mudarabah ijarah and hibah bil sharth (grants with condition).
The contracts also don't contain elements which are prohibited by Islamic Sharia such as interest and gharar.
The contract used between Employer and Participants is the agreement of grant with condition which needs to be reviewed its pillars and conditions. The first condition is wahib or person who gives the grant. Wahib must have full ownership on the subject matter, must have full capacity to exercise his right, being mature and not under forced condition. In this case, wahib is the Employer. PFUMS has set up the detail of the procedure and mechanism. Here, we would like to highlight some important points. The highlighted points will include aspects on membership requirements, premium payment, rights of participant, source of money, and investment process.  (Sam, et al., 2014). This type of investment is aimed at participants / individual customers or companies using mudarabah contract. Here, the calculation method obtained by the participant / customer will be done by means of profit sharing ratio. is long-term securities based on shari'ah principles issued to sukuk holders which require issuers to pay income to sharia bond holders in the form of profit sharing / margins / fees as well as repayment of principal bonds at maturity (Sam, et al., 2014).
There are two types of sukuk, sovereign sukuk and corporate sukuk. Sovereign sukuk is type of sukuk issued directly by the government. It is also possible for any city to issue municipal sukuk. In the other hand, corporate sukuk is the sukuk issued by institutions, agencies, corporation and sort of those entities. The purpose of the sovereign sukuk is to build country's infrastructure or finance other project. Some sukuk issued by the government that bought by PFUMS are PBS12 and SR008.
In both PBS12 and SR008, government order the rental object (which is the property owned by government or any project) which later on managed and eventually offered to the public to become sukuk holder of the project. In this regard, PFUMS becomes the sukuk holder to fund the project held by government through sukuk PBS12. The proceed of sukuk issuance to rent government-owned property or fund any project. Later on, government gives payment benefit to the holders per six months for sukuk PBS12 and monthly for sukuk SR008 as the holders are entitled to rental benefit. This mechanism will apply until maturity.
Apart from the sovereign sukuk, PFUMS also buys the corporate sukuk from various companies. The companies are BRI Syariah, Angkasa Pura, PT. The money pooled by PFUMS which consists of Employer and participant contribution is in fact fund that must be managed and invested in various instruments in order for the money to grow. This is simply because the long distance period between the time of the premium paid and the time participant gets pension benefit, starting from the participant get enrolled at PFUMS until his retirement. This is why the money pooled at PFUMS is said as having long-term characteristic. 4

d. Transer of fund between of Pension Fund institutions
The transfer between PFUMS and any other Pension Fund institutions occurs when the participant decides to make advanced retirement, exit from the pension plan or changing the Pension Fund institution. In that case, all the contributions paid to PFUMS will be returned to the respective participant or transferred to other institutions.
By doing so, participant is still able to continue the pension contribution even though not attached any more to UMS. Of course, the continuation of contribution is given to other Pension Fund, not to the PFUMS.

CONCLUSION AND SUGGESTION
Based on the research above, we can make conclusion as following: 1. The contract used between Employer and Participant is hibah bi al-sharth (grants with condition) from Employer as wahib to the Employee as mauhub lah.
2. The contract used between Employer and Manager of PFUMS is wakālah (delegating authority) where the Employer delegates its authority to the Manager of PFUMS to manage the fee contribution as directed by the Establisher.
3. The contract used between PFUMS and Participant is muḍārabah where PFUMS act as muḍārib (manager) while Participant as ṣāhibul māl (fund owner). Apart from the conclusion, it is also important to give suggestion based on the research result that has been summarized above. Even tough PFUMS succeed in implementing the contracts based on shariah requirements, there are still points to emphasize. One of the points is keeping the good work PFUMS has done so that it will always kept on the track of Islamic finance. Business always brings turbulence. Once it happens, PFUMS must still hold tightly the Islamic principle that they currently do.