Officers at BPJS Ketenagakerjaan explain the benefits of the government-sponsored insurance scheme. (ID Photo)

Controversial Regulation for Old-Age Savings Launches Public Debate


MAY 21, 2016

Jakarta. A revised government regulation allowing workers who resign from employment, as well as those who are fired, to claim their mandatory old-age savings in the Social Security Administration Body for Employment is brought into a public debate, due to a controversy over the effectiveness of the current scheme.

“The government Regulation (PP) No. 60, year 2015 and Labor Minister Regulation No. 19, year 2015, actually contradicts the philosophy of old-age-savings that should cover workers’ financial risks in their old age. They need to be revised,” said R. Abdullah, the chairman of Chemical, Energy and Mining Workers Union, known as SPKEP-SPSI.

Abdullah made the comments during a discussion forum in Cikarang, West Java, recently. It was attended by representatives from the government and non-government organizations.

Both the presidential and ministerial regulations guide the implementation of the Old-Age Savings program, also known as JHT, which initially required employees to pay monthly premiums from their salaries to receive cash benefits after reaching retirement, death or permanent disability. All employers, bar state-related organizations, must register the company and employees into BPJS insurance and pension schemes, including the JHT.

President Joko Widodo's administration made a major revision to the scheme last year, which allows members to receive 10 percent of their savings after 10 years of membership — and the full amount upon reaching the retirement age of 56. Previously, when BPJS was a state-owned enterprise known as Jamsostek, members who had been registered up to five years can claim their JHT if they are fired or resign.

Labor unions and worker representatives rallied last year after the changes. Towards the end of 2015 many factories closed down, causing the loss of jobs, as the economy slowed and monthly salary minimums increased in most provinces.

Joko tamed the outcry with a fresh revision, scrapping the 10 year requirement and allowing workers to claim their entire JHT savings. The solution pleased the unions but raised questions over how the body will manage its liquidity and the initial spirit of the product.

Labor unions have split over protecting short term needs of workers or safeguarding the retirement age.

Abdullah suggested the government set up a mandatory requirement for companies to provide allowances for terminated workers, including contract workers, with the amount calculated "proportionally."

The allowance would serve as a safety net for the unemployed and contract workers between jobs. Current laws compensate only workers with permanent employee status and is calculate based on the length of the worker's time with the company.

Timboel Siregar, a coordinator for the watchdog BPJS Watch, said there are many companies that don't comply with current government policies to compensate fired employees. Employers must stick to the 2013 Law on Job Termination, which would minimize withdrawals from JHT, he said.

Timboel said the current administration may need to review the JHT scheme and re-consider the minimum BPJS Ketenagakerjaan membership for JHT withdrawals.

The five year minimum is considered enough to give workers a "reasonable" return on their savings, as the body invests in portfolio assets offering returns higher than the average term deposits, he said.

K. Guntoro, head of sub-directorate for social security and internal affairs at the labor ministry, said the government will only respond when stakeholders in the sector — the workers and employers — unite in one voice.

Iswandhy Syaruly, head of division of membership at BPJS Ketenagakerjaan, said the body is only the operator of the employment social security and will listen to what the government says on the matter.

Obon Tabroni, an official at the forum of workers union in metal industry (FSPMI), with the bulk of its members coming from Indonesia's biggest industrial park in Bekasi, said the government must take firm action on companies disobeying regulations on SJSN law, in which there are many cases where workers are not registered with BPJS Ketenagakerjaan, a conditions that worsens the situations when they are terminated.

Currently, there are no plans by the government to alter any of its effective regulation on JHT.