Elvyn Masassya, president director of the Social Security Administration Body for Employment, or BPJS Ketenagakerjaan, speaks at a discussion in Surabaya to explain new benefits for its customers. (GA Photo/Defrizal)

BPJS Clarifies Pension Concerns for Retired, Resigning Workers


AUGUST 23, 2015

Bali/Surabaya. Workers who resign from employment, as well as those who are fired, will be able to access old-age savings from the Social Security Administration Body for Employment, or BPJS Ketenagakerjaan, a minister clarified.

Manpower Minister Hanif Dhakiri confirmed to reporters invited to cover a seminar held by BPJS Ketenagakerjaan in Bali last week that all employees who lose their jobs will be eligible to withdraw savings, known as JHT, as a lump sum.

"Those who can withdraw old-age savings include those resign," Hanif said, adding that this will be regulated under Government Regulation (PP) No. 60, which will revise the Government Regulation No. 46, year 2015 on Implementation of Old-Age Savings Program.

"We are working to complete the revision," he said, but declining to specify the time frame for the release of the new regulation.

Changes in regulations led workers and labor unions to take to the streets and social media en masse, accusing the government of blindsiding the public after learning that under PP No. 46 policy, holders may only receive 10 percent of their savings after 10 years of membership — and the full amount only upon reaching the retirement age of 56 years.

BPJS Ketenagakerjaan president director Elvyn Masassya confirmed the minister's remarks, before clarifying that withdrawals are conditional on accounts being inactive for a month — that is, policy holders must not be employed by any company, with no payments made to their JHT.

Active workers are still eligible to withdraw 10 percent of their JHT after 10 years of membership with BPJS Ketenagakerjaan and a further 30 percent which can be used to fund a down payment for a house.

"The 10 year period isn't that the government want to extend the membership period and hold workers money for a longer time. In the revision, active workers can also withdraw some percentage of their JHT. It wasn't previously regulated like this," Elvyn told reporters attending a seminar called "New Era for Social Security Services in Indonesia" in Bali.

The JHT can also be fully withdrawn when the policy holder reaches 56-years-old, experiences permanent disability or dies — in which the funds will be disbursed to the worker's spouse or family.

The lump sum will cover the entire money paid from their monthly salary in to the account, plus the return of investment from having the money held by the social security body.

The seminar was attended by international guests including Errol Frank Stoove, the president of the International Social Security Association (ISSA) and Junichi Sakamoto from Nomura Research Institute in Japan.


BPJS Ketenagakerjaan began full operations on July 1 as a government body exerting more power in protecting rights of employees at work and to capture millions more of workers, then unprotected, under the mandatory universal pension program.

The full legal transformation of the body — previously a state pension fund called Jamsostek — into a non-ministry government agency supervised directly by the president means it now has the authority to monitor companies operating in the country to ensure registration of employees into the compulsory social security scheme.

The body now provides four insurance services: occupational accidents, saving for old age and death insurance and pension scheme.

Foreign workers who have been working in Indonesia for at least six months must be registered to BPJS Ketenagakerjaan. BPJS Ketenagakerjaan also requires workers under contract status to be registered.

The full status also allows the body to start insuring workers without a regular salary. These workers are known as informal-sector workers.

Under the new scheme, companies pay 0.3 percent of the workers' reported salary for death insurance; 0.24 to 1.74 percent for occupational accidents depending on the sector the company involved in; 5.7 percent for old-age savings (JHT) in which 3.7 percent is paid by company and 2 percent by workers.

There is also an additional pension fund which costs 3 percent of the workers' salary, of which 2 percent is paid by the company and 1 percent by the worker.

The pension fund is different to JHT, as JHT is paid in lump sump and pension is paid monthly until the beneficiary dies. Once the beneficiary dies, the pension fund is transferred to the spouse, or children until they reach 23 years of age.

More Benefits

In a separate event in Surabaya, Junaedi, director for membership and institutional relationship at BPJS, said the body has given more benefits to workers for their four programs.

A previous maximum of Rp 20 million ($1,400) for medical treatment after an occupational accident has been removed.

"Now BPJS Ketenagakerjaan covers the cost of medical treatment until the worker recovers," said Junaedi, in an event where BPJS Ketenagakerjaan held a discussion regarding the new scheme.

The body also offers a program called "Return to Work" for occupational accidents, which provides assistance for workers dealing with disability due to occupational accidents.

Other additional benefits is for death insurance, in which the family of the worker can access free transportation of the deceased to be buried. Funeral costs are also covered and there is a limited scholarship for the children of the worker.

BPJS chief Elvyn also explained the housing benefit for its members. He said the government body will increase investment in the property sector to provide housing for workers.

"According to PP No. 55, year 2015, BPJS Ketenagakerjaan can allocate investment for property, at a maximum 30 percent from its total portfolio. We already have plans on the pipeline to participate in property projects located in various places," Elvyn said.

The property projects that BPJS Ketenagakerjaan will be involved are the subsidized low-cost apartments for sale (rusunami) and subsidized low-cost apartments for rent (rusunawa).

He explained that BPJS Ketenagakerjaan have been involved in Rusunami and Rusunawa project in nine cities. Units offered to workers are apartment units at less than Rp 350 million.

Over the next two years, BPJS Ketenagakerjaan targets to be involved in various property projects to provide 80,000 workers with housing.

"The way we invest, is that there's a developer who will build the property, if they seek funds for the project then we can place our funds in the banking sector, which can lend the money to the developer. Or if they plan to sell bonds, we will buy the bonds. It's indirect investent," Elvyn said.

Funds Under Management

In Bali, Elvyn explained that BPJS Ketenagakerjaan now registers Rp 203 trillion worth of assets, of which Rp 197 trillion belongs to workers.

Elvyn admitted the fluctuation in the financial markets have hurt investment, but returns managed by the agency have been stable. Investment returns maintained at 10 percent in the first half of the year, relatively the same level as last year.

"We invest in a long term horizon, the negative impacts [of the financial market fluctuation] is not significant. Why? Because we keep our portfolio in the stock market. That means, we don't sell our stocks that we invest," said Elvyn.

BPJS Ketenagakerjaan registered 17.2 million workers to its insurance scheme and has set a target to increase the number to 19.8 million in 2016.

Indonesia has a labor force of 11o million, but only about 40 million are identified as working in the formal sector, that is workers who receive a regular salary.

GlobeAsia was invited to cover the two events held by BPJS Ketenagakerjaan in Bali and Surabaya.