Indonesia - Pensions

In 2011, only  8.6 per cent of all economically active citizens Indonesians are covered for an old age monthly pension, the vast majority of whom are in the formal sector. Civil servants (around four per cent of the workforce) and military and police personnel (around one per cent of the workforce) receive a comprehensive defined-benefit monthly pension as well as a lump sum old age savings payment. Around a quarter (10,311,669) of the private sector workers, or eight per cent of the economically active population, are covered by the Jamsostek provident fund programme, which is a compulsory defined-contribution savings scheme where the benefit is paid in a lump sum upon retirement (Jamsostek 2010 annual report). A small additional number of private sector workers voluntarily join private pension schemes. The voluntary programmes include both defined-benefit and defined-contribution types of schemes. In addition, two non-contributory schemes targeted at vulnerable elderly (without family support) and people with severe disabilities exist.

Programmes

Pension and old age savings programme for civil servants – PT Taspen | data pensions - savings

  • Target: civil servants (around 4% of the workforce).
  • Benefits: retired civil servants receive a monthly pension and a lump sum old age savings benefit at retirement age. The monthly pension benefit amounts to 2.5% of the final month's pay multiplied by the number of years of civil service up to a maximum of 80%, whereas the lump-sum old age savings benefit is based on a multiplication of the number of years of service, final monthly salaray, and a factor determined by the Ministry of Finance (the factor is currently 0.6). The retirement age varies from 56 to 60 years, depending on the position. Early retirement is possible for those who are 50 years or older and have worked as civil servants for at least 20 years.

 

Pension and old age savings programme for military personnel – PT Asabri | data

  • Target: military personnel (around 0.5 of the workforce).
  • Benefits: similar benefits to PT Aspen are provided under the management of PT Asabri. Retirement age for military personnel is generally younger, at 50 years old.

 

Jamsostek old age programme (JHT) – Old age benefits for formal private sector employees | data

  • Target: formal private sector employees.
  • Benefits: the programme is a provident fund, where members receive a lump-sum benefit corresponding to the accumulated contributions and declared interest refunded. The conditions for the withdrawal of the lump sum are (1) retirement at the age of 55 years, (2) total and permanent disability, (3) death of the employee before retirement age, or (4) unemployment in case the employee has contributed for five years or more. Workers contribute 2% of their wages and employers contribute 3.7% of wages to the provident fund.

 

Voluntary private pension schemes

  • Target: all workers on a voluntary basis.
  • Benefits: based on Law no. 11/1992 regarding pension funds, these can be a defined-benefit or a defined-contribution programme. The maximum benefit for a defined-benefit programme is 2.5% of the salary per year of service and an overall maximum of 80%. In the case of a defined-contribution programme, the contributions cannot be higher than 20% of the employee's salary, with the employee's contribution not exceeding 7.5%.

 

Jamsostek pilot programme for informal economy workers | data

  • Target: informal economy workers earning at least the minimum wage (approximately IDR 1 million, subject to variations across provinces). The number of informal workers joining this scheme is very low.
  • Benefits: the contribution is set at a minimum of 2% of income, where "income" is the minimum wage. The lump-sum benefit is composed of the accumulated contributions plus the return on the investment.

 

Benefits for vulnerable elderly | data

  • Target: vulnerable elderly (elderly who are unproductive and/or have no caregiver).
  • Benefits: the Ministry of Social Affairs is managing a non-contributory minimum pension programme which provides cash transfers called Jaminan Sosial Lanjut Usia (JSLU). The amount of the minimum pension is IDR 300,000 per month, which is on average above the poverty line. The number of beneficiaries is determined by the amount of funds available at the central level. The Ministry of Social Affairs also provides subsidies to old people's homes called Panti Sosial Tresna Wredha. The programme transfers IDR 3,000 per person per day to these homes. This subsidy amount is considered too low to even cover daily food expenditures. To address this issue, some provinces have initiated programmes to provide subsidies to pay the full cost of the old people's homes.

 

Benefits for persons with disabilities | data

  • Target: people with severe disabilities.
  • Benefits: Jaminan Sosial Penyandang Cacat (JSPACA) is a cash transfer programme targeting people with severe disabilities. Presidential Instruction No. 3/2010 specifies that 19,500 disabled persons were targeted in 2011. The number of beneficiaries of JSPACA is determined by the amount of funds available at the central level resulting in very low coverage. The Ministry of Social Affairs also provides subsidies to rehabilitation centres and homes for disabled people, with a standard amount of IDR 3,000 per person per day (Directorate General of Social Rehabilitation, Ministry of Social Affairs, 2010). Again, this subsidy is considered too low even to cover daily food expenditures. Some provinces opt to fully subsidize the cost of the rehabilitation centres and homes for disabled people. Disability caused by traffic accidents is covered by a general traffic accident insurance, Jasa Raharja, providing a small one-off benefit.

 

 

Information in this section comes from the Observatory of the International Social Security Association (ISSA). It is collected through surveys carried out by the ISSA in co-operation with the U.S. Social Security Administration (SSA).
  1. Regulatory framework
  2. Coverage
  3. Source of funds
  4. Qualifying conditions
  5. Cash benefits for insured workers (except permanent disability)
  6. Permanent disability benefits for insured workers
  7. Survivors benefits for dependents
  8. Administrative organization
     

Regulatory Framework (ISSA)

First law: 1977 (Government Regulation No. 33).

Current law: 1992 (Act No. 3, employees' social security).

Type of program: Provident fund and social insurance system.

Coverage

Employees of establishments with 10 or more employees or a monthly payroll of at least 1 million rupiah. Employees with contracts of less than 3 months are covered for social insurance death benefits only.

Voluntary coverage for self-employed persons.

Coverage is being extended to employees of smaller establishments and to organized informal-sector workers, including family labor, fishermen, and employees of rural cooperatives.

Special systems for public-sector employees and military personnel.

Source of funds

Insured person

Provident fund: 2% of gross monthly earnings.

Social insurance: None.

Self-employed person

Provident fund: At least 2% of gross monthly declared earnings.

Social insurance: 1% of gross monthly declared earnings.

Employer

Provident fund: 3.7% of monthly payroll.

Social insurance: 0.3% of monthly payroll.

Government: None.

Qualifying conditions

Old-age benefit (provident fund): Age 55 (men and women). Retirement from employment is not required.

The benefit may be deferred. There is no maximum age for deferral.

Drawdown payments: At any age if emigrating permanently, if starting work as a public employee or beginning military service, or if unemployed for at least 6 months after at least 5 years of fund membership.

Disability benefit (provident fund): Younger than age 55 with a total permanent incapacity for work as a result of a work injury. A medical doctor must certify the incapacity.

Survivor benefit (provident fund): The provident fund member was younger than age 55 at the time of death or older than age 55 and receiving a periodic pension at the time of death. The benefit is paid to the spouse or, in the absence of a spouse, to dependent children.

Death grant and funeral grant (social insurance): Paid for the death of the insured.

Cash benefits for insured workers (except permanent disability)

Old-age benefit (provident fund): A lump sum of total employee and employer provident fund contributions plus accrued interest is paid; optionally, a periodic pension is paid to members with more than 50 million rupiah in their provident fund account.

Drawdown payments: The maximum lump sum is total employee and employer provident fund contributions plus accrued interest.

Permanent disability benefits for insured workers

Disability benefit (provident fund): A lump sum of total employee and employer provident fund contributions plus accrued interest is paid; optionally, a periodic pension is paid to members with more than 50 million rupiah in their provident fund account.

Survivors benefits for dependents

Survivor benefit (provident fund): A lump sum of total employee and employer provident fund contributions plus accrued interest is paid; optionally, eligible survivor(s) may receive a periodic pension if the deceased had more than 50 million rupiah in his or her provident fund account.

If the deceased was receiving a periodic pension, the survivor benefit is the total employee and employer provident fund contributions plus accrued interest minus the amount already paid to the deceased member.

Death grant and funeral grant (social insurance): A lump-sum death grant of 5 million rupiah and a lump-sum funeral grant of 1 million rupiah are paid.

Eligible survivors (in order of priority) are the spouse, children, parents, grandchildren, grandparents, siblings, or parents-in-law. In the absence of eligible survivors, the benefit is paid to a person named by the deceased; in the absence of a named survivor, only the funeral benefit is paid to the person who pays for the funeral.

Benefit adjustment: Social insurance benefits are adjusted every 2 years.

 

Administrative organization (ISSA)

Ministry of Manpower and Transmigration (http://www.nakertrans.go.id) provides general supervision.

Ministry of Manpower and Transmigration
Jl. Jend. Gatot Subroto No. 51,
Jakarta 12950,
Indonesia

Tel.: +(62) 21 529 3356
Fax: +(62) 21 522 7588

Employees Social Security System (Jamsostek) (http://www.jamsostek.co.id) collects contributions, administers benefits, and manages the investment of funds.

Employees Social Security System
Jl. Jend. Gatot Subroto No.79,
Jakarta 12930,
Indonesia

Tel.: +(62) 21 520 7797
Fax: +(62) 21 520 2310

 

Social security schemes and programs by branch