Reforms to Pension Program Increase Protection

KOMPAS/PRAYOGI DWI SULISTYO

Timboel Siregar

JAKARTA, KOMPAS — The Financial Sector Law, which was passed on 15 Dec., 2022, opens space for the government to standardize all pension programs, including old age social security and pension social security. This is expected to increase the protection of workers in old age.

This was disclosed by the secretary general of the Indonesian Workers Organization (OPSI), Timboel Siregar, in Jakarta on Sunday (12/25/2022). OPSI assessed that with the presence of the finance law, the government was increasingly aware that workers played an important role in the development and strengthening of the financial system through the Social Security Program.

"With the existence of the provisions for the harmonization of all pension programs in the Financial Sector Law, we judge it can open up space for participants in Social Security for Employment (Ketenagakerjaan) who are not recipients of wages or BPUs joining pension social security," said Timboel.

Also read:

> Workers Need Urgent Protection

> Indonesian Workers and Global Crisis

Timboel’s reason was that workers who experienced termination of employment would become BPU participants. They would remain entitled to continue the pension social security contribution to meet the 15 years of contributions.

Beyond that, there are around 80 million informal workers in the BPU category. They also have the right to have pension social security.

Article 189 paragraph (1) of the Financial Sector Law states that the government shall align the practices in all pension programs in an effort to increase the protection of old age and advance public welfare. In accordance with Article 189 paragraph (2), this standardization includes the regulation of mandatory pension programs. Furthermore, in Article 189 paragraph (3) it is explained that a pension program that is mandatory includes an old age insurance program (JHT) and pension security, which is part of the national social security system.

KOMPAS/TOTOK WIJAYANTO (TOK)

Daily workers lift goods to be put into wooden ship hulls at Sunda Kelapa Harbor, Pademangan, North Jakarta, Sunday (25/12/2022). The busy activity of loading and unloading of goods continues at the pinisi ship port even though it is a national holiday.

Then, Article 189 paragraph (4) of the Financial Sector Law states that in addition to the JHT program and pension security, the government can carry out additional compulsory pension programs that are held competitively for workers with certain incomes in order to standardize all pension programs in an effort to protect old age and advance general welfare.

"Additional retirement social security can be intended for workers who have large wages. It is not mandatory for the company to include employees in the ordinary pension fund program (not pension social security). If additional pension social security is mandatory, according to the mandate of the P2SK Law, based on our prediction, the company may leave the pension fund program that they follow outside the Social Security Organizing Agency (BPJS Ketenagakerjaan)," said Timboel.

He added that the membership of wage recipient workers (PPU) in Pension Social Security was still around 13.4 million people. Meanwhile, the number of formal workers categorized as PPU was more than 50 million.

Also read:

> ‘Toll Road’ for Non-procedural Migrant Workers

> Shadow of Politics in Contract Worker Recruitment

He suspected that the supervision and law enforcement of membership in the social security program was relatively low. In addition, micro and small enterprises were not required to include their workers in pension social security.

Deputy chair of the employment division of the Indonesian Employers Association (Apindo), Aloysius Budi Santoso, when contacted, said his party had not read all the details of the Financial Sector Law. However, he said the provisions for additional pension social security were not urgently needed.

"During the discussion of the draft of the National Social Security System Law [Law No. 40/2004 on the National Social Security System] at that time, we asked why there had to be two protections for workers in their old age, namely JHT and Pension Social Security. Will the application of the two programs not overlap, especially for some companies that have included employees of the Financial Institution Pension Fund Program [DPLK] or employer pension funds [DPKK]?" said Aloysius.

KOMPAS/PRIYOMBODO

A worker carries rice to a buyer's vehicle at the Cipinang rice wholesale market, East Jakarta, Thursday (12/15/2022).

He said if the provisions of Article 189 paragraph (4) of the Financial Sector Law were applied, employers and workers would get additional fees. From the company's side, he estimated that the portion of costs to be spent on various contributions, including social security contributions, would be around 15 percent.

Meanwhile, a lecturer in the Faculty of Law at Airlangga University, M Hadi Subhan, argued that the provisions for the standardization of all pension programs provided opportunities for integrating JHT and pension securities. If this provision was carried out, the consequence would be to ease the burden of entrepreneurs in participating in paying premiums/contributions.

"The consequence for workers is that they have the potential to benefit from one program. Thus far, employees who are registered as participants at BPJS Ketenagakerjaan get the benefits offered from JHT and Pension Social Security," said Hadi.

Employees who are registered as participants at BPJS Ketenagakerjaan get the benefits offered from JHT and Pension Social Security.

JHT and Pension Social Security have a difference in the form of benefits. The form of JHT benefits is in the form of cash whose amount is the accumulation of all contributions that have been paid plus the results of its development. Meanwhile, pension social security benefits are in the form of cash and are paid every month or at the same time if the participant enters the pension age, suffers total permanent disability or dies.

Head of the Manpower Ministry's public relations bureau, Chairul Fadhly Harahap, said as long as the new regulations had not been issued, the old regulations regarding the implementation of JHT and Pension Social Security remained in effect.

This article was translated by Hyginus Hardoyo.