The Arrangement for Pension Guarantee Program

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Background

Pension Guarantee Program is regulated under Government Regulation No. 45 of 2015 on the Arrangements for Pension Guarantee Program (“GR 45/2012”).  GR 45/2015 has been enacted since 1 July 2015. Pension Guarantee is defined as social guarantee which is aimed to preserve a decent living for the participants and/or its inheritors by granting an income to them after reaching their retirement age, experiencing total permanent disability, or die (“Pension Guarantee”).

Participation of Pension Guarantee Program

In performing such program, the employers are responsible to register all of their employees to the Social Security Employment Agency/Badan Penyelenggara Jaminan Sosial Ketenagakerjaan (“BPJS Ketenagakerjaan”) as the participant of Pension Guarantee Program.

The parties who are eligible to be the participants of Pension Guarantee Program are:

  1. employee who is working under state administrator employer; and
  2. employee who is working under non state administrator employer.

The participation of the Pension Guarantee program is enacted after the employee has been registered, and the payment of the first contribution has been paid, also deposited by the employer to BPJS Ketenagakerjaan.

In the event where the employer is negligent or does not perform such registration, the employee is entitled to register themselves in the Pension Guarantee Program.

The Grant of Pension Benefit

Pension Benefit is an amount of money that is paid every month to the participant who reaches the retirement age, experiencing total permanent disability, or to its inheritors for the participant who has already died (“Pension Benefit”).

Several forms of Pension Benefit:

  1. old-age pension;
  2. disability pension;
  3. widow or widower pension;
  4. child pension; or
  5. parents pension.

The calculation formula on the grant of Pension benefit to the participant/beneficiary of the Pension Benefit is set out as follows:

  • For the first 1 (one) year, Pension Benefit is calculated based on a formula, which is 1% (one percent) multiplied by the number of months of payment of contribution to BPJS Ketenagakerjaan ("Contribution Period"), divided by 12 (twelve) months, multiplied by the average weighted annual wage during Contribution Period divided by 12 (twelve);
  • For the next 1 (one) year, Pension Benefit is calculated as much as the Pension Benefit in the previous year, multiplied by the indexation factor (1 (one) plus the general inflation rate of the previous year).

Pension Benefit shall be paid to the participant/beneficiary of the Pension Benefit with the following provisions:

  1. the earliest is since the rights to Pension Benefit began to be calculated and supporting documents are received completely by BPJS Ketenagakerjaan; and
  2. the latest is 15 (fifteen) days since the rights to Pension Benefit has been incurred and supporting documents are received completely by BPJS Ketenagakerjaan.

 

Payment of Contribution

The employer and participant must pay an amount of money or Pension Benefit contribution (“Contribution”) regularly every month to BPJS Ketenagakerjaan of which it has become responsibility for each party.

The amount of such Contribution is 3% (three percent) of wages per-month as follows:

  1. 2% (two percents) of wage that is covered by the employer;
  2. 1% (one percent) of wage that is covered by the participant.

The contribution shall be paid every month, at the latest on the 15th. A delay in paying such Contribution by the employer, will be imposed by a fine of 2% (two percents) for every month of delay from the total amount of Contribution that should have been paid.

Type of Sanction

Employers who do not implement and/or violate certain provisions that are regulated under GR 45/2015 can be imposed with administrative sanction in the form of (i) written warning, (ii) fine, and (iii) do not obtain certain public services.

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