Indonesian Pension Contribution Set to Rise to 8% of Salary

Indonesian workers must brush up on their skills to remain competitive in an integrated Asean market, according to headhunters. (Antara Photo/Fanny Octavianus)

By : Siprianus Edi Hardum | on 11:57 AM April 09, 2015
Category : Business, Economy

Jakarta. The Indonesian government plans to raise the pension contribution to 8 percent of an employee’s monthly salary starting in July from 3 percent now, said Labor Minister M. Hanif Dhakiri on Wednesday.

The plan is part of a new government regulation draft that aims to revamp the country’s pension system.

“The draft has been finalized. We are only waiting for the harmonization process at the Law and Human Rights Ministry and ratification,” Hanif said.

Hanif did not elaborate on the share of contributions by employees and employers in paying pensions. Currently, employees pay 1 percent of their salary for pension, while their employers pay the remaining 2 percent.

Indonesia started last year a universal pension program under BPJS Ketenagakerjaan, which seeks to cover pensions for all workers nationwide.

The draft includes a clause that requires employees to be in the universal pension program for at least 15 years before making use of the pensions. It also sets the pension age at 56 years old.


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