1Berita News – The government is set to launch a new mandatory retirement program for workers, in addition to the Workers Social Security Agency (BPJS Ketenagakerjaan).
The Financial Services Authority (OJK) states that this is a mandate of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (PPSK Law).
OJK’s Executive Director of Insurance Supervision, Guarantee, and Pension Funds, Ogi Prastomiyono, mentioned that the regulations regarding the new mandatory retirement program are outlined in Article 189 paragraph 4 of the aforementioned policy.
He then cited the International Labour Organization (ILO), stating that pension benefits should amount to 40 percent of the recipient’s last income. However, in Indonesia, it’s currently only around 20 to 22 percent of the last salary.
“Therefore, it is enhanced, and within the mandate of Article 189 (PPSK Law), there is an additional mandatory pension program. A draft government regulation (RPP) is currently being prepared, which will determine the income subject to additional pension contributions,” Ogi said during the Annual Financial Services Industry Press Conference 2024 broadcasted on OJK’s YouTube channel, Tuesday (2/20).
He explained that up until now, pension benefits for workers have been managed by BPJS Ketenagakerjaan. Meanwhile, PT Asabri manages the military/police pension fund (DAPEN), and PT Taspen is responsible for managing the pensions of civil servants (ASN).
According to the mandate of the PPSK Law, the introduction of the new mandatory retirement program must be implemented or managed competitively. Ogi mentioned that discussions have already taken place regarding who will manage the pension fund, whether it will be BPJS Ketenagakerjaan or the Employer Pension Fund (DPPK)/Financial Institution Pension Fund (DPLK) which has been running voluntary retirement programs.
“It seems that it will be entrusted to the DPPK and DPLK. So, if BPJS Ketenagakerjaan focuses on certain mandatory insurance which is a form of social security,” Ogi explained.
“Obligatory in BPJS is old-age insurance (JHT) and pension insurance. The target is currently 8.7 percent, which will be increased to 15 percent. This means that the pension benefits received will be approximately 40 percent of the last income,” he added.
OJK emphasizes that there are four main government regulations that must be issued to follow up on the mandate of the PPSK Law regarding pension funds. These include regulations related to mandatory insurance, insurance policy guarantee programs, harmonization of pension programs, and regulations on the management of asset liability for pension programs, especially to mitigate losses.
“These four regulations must be issued within a year. By January 12, 2025, the regulations will be issued, and then OJK will follow up with the necessary derivative provisions for implementation,” Ogi concluded.
