In an effort to ensure worker well-being in retirement, the government is about to issue a regulation covering its pension benefit program. As the party responsible for this policy, the Ministry of Manpower (“Ministry”) has decided to set the pension premium at 8 percent. This amount is similar to what the draft regulation proposed last April (See ILB No. 2629).
The 8 percent premium will be borne by both the employer and employee at a ratio of 5:3 respectively. The premium will be managed by the Social Security Agency for Labor (“BPJS Labor”) as the government sees this as the most feasible option for the time being.
Irianto Simbolon, Director General of Social Security and Industrial Relations Development at the Ministry, explained that this will be officially decided by the government. He said that Minister of Manpower M. Hanif Dakhiri has met President Joko Widodo several times to discuss the pension benefit program.
The President himself has instructed Minister Dakhiri to immediately conclude the pension benefit program policy given that four programs on social security under the management of BPJS Labor must be fully operational on 1 July of 2015. The four programs consists of the Pension Fund, Old-Age Benefit (Jaminan Hari Tua – JHT), Occupational Injury Benefit (Jaminan Kecelakaan Kerja – JKK), and Death Benefit (Jaminan Kematian – JKm).
Mr. Simbolon explained that the 8 percent premium is the key point for ensuring Pension Benefit Program’s continuity. He firmly believes the pension premium will contribute to its smooth implementation as well as reduce the burden of employers from their obligations to pay severance payments. Mr. Simbolon also hopes that the Pension Fund program will increase the welfare of workers.
Commenting on the issue, Bambang Purwoko, member of the National Social Security Committee (DJSN) revealed that the 8 percent premium is significantly lower than the recommendation from BPJS Labor (15 percent) and the International Labor Organization (17 percent). However, he agrees with the Ministry of Finance, which takes the view that there is a possibility of non-payment if the premium is too high.
Said Iqbal, President of the Confederation of Indonesian Workers Union (Konfederasi Serikat Pekerja Indonesia – KSPI) asserted that the Minister of Finance has tried to hamper the Pension Benefit Program. According to him, the 3 percent recommendation from the Ministry of Finance will only give a retired worker 20-30 percent of their final salary.
As a recommendation, Mr. Iqbal requested the President to set the premium at between 10-12 percent. With a premium at this level, Mr. Iqbal said that employers would pay 7 to 9 percent, with the rest of the premium to be borne by employees.
In an effort to ensure worker well-being in retirement, the government is about to issue a regulation covering its pension benefit program. As the party responsible for this policy, the Ministry of Manpower (“Ministry”) has decided to set the pension premium at 8 percent. This amount is similar to what the draft regulation proposed last April (See ILB No. 2629).
The 8 percent premium will be borne by both the employer and employee at a ratio of 5:3 respectively. The premium will be managed by the Social Security Agency for Labor (“BPJS Labor”) as the government sees this as the most feasible option for the time being.
Irianto Simbolon, Director General of Social Security and Industrial Relations Development at the Ministry, explained that this will be officially decided by the government. He said that Minister of Manpower M. Hanif Dakhiri has met President Joko Widodo several times to discuss the pension benefit program.
The President himself has instructed Minister Dakhiri to immediately conclude the pension benefit program policy given that four programs on social security under the management of BPJS Labor must be fully operational on 1 July of 2015. The four programs consists of the Pension Fund, Old-Age Benefit (Jaminan Hari Tua – JHT), Occupational Injury Benefit (Jaminan Kecelakaan Kerja – JKK), and Death Benefit (Jaminan Kematian – JKm).
Mr. Simbolon explained that the 8 percent premium is the key point for ensuring Pension Benefit Program’s continuity. He firmly believes the pension premium will contribute to its smooth implementation as well as reduce the burden of employers from their obligations to pay severance payments. Mr. Simbolon also hopes that the Pension Fund program will increase the welfare of workers.
Commenting on the issue, Bambang Purwoko, member of the National Social Security Committee (DJSN) revealed that the 8 percent premium is significantly lower than the recommendation from BPJS Labor (15 percent) and the International Labor Organization (17 percent). However, he agrees with the Ministry of Finance, which takes the view that there is a possibility of non-payment if the premium is too high.
Said Iqbal, President of the Confederation of Indonesian Workers Union (Konfederasi Serikat Pekerja Indonesia – KSPI) asserted that the Minister of Finance has tried to hamper the Pension Benefit Program. According to him, the 3 percent recommendation from the Ministry of Finance will only give a retired worker 20-30 percent of their final salary.
As a recommendation, Mr. Iqbal requested the President to set the premium at between 10-12 percent. With a premium at this level, Mr. Iqbal said that employers would pay 7 to 9 percent, with the rest of the premium to be borne by employees.