PROVIDENT FUNDS IN INDONESIA
The existence of provident funds in Indonesia is far from satisfactory; following the conception and nature of provident funds, only one program so far exists, e.g. JAMSOSTEK (translated: Employees’ Social Security Program) besides pension funds, which shall further be elaborated below.
1. PENSION FUNDS
Pension funds in Indonesia started in the early 70’s with the Ministry of Finance, Directorate General of Financial Institution, Directorate of Pension Funds functioning as the supervisory body. Pension’s funds are managed by trustees in form of legal entities, mostly in form of a foundation. Typical characteristic for pension funds is that the participation is voluntary. By the end of the year 2001 there are 335 pension funds legal entities providing two pension programs, e.g. defined benefit and defined contribution programs, out of which the defined benefit program is the dominant program, provided by 271 pension funds trustees or institutions. More than 1.5 million employees are participating in pension funds programs and the total net asset value of pension funds at the end of 2001 is exceeding Rp. 35 trillion. Depending on the program, contribution from the participants is ranging from 4.04% to 26.68% from the pension or retirement income.
Pension funds covering civil servants and military personnel are managed separately and are not included in the pension funds schemes mentioned above.
2. JAMSOSTEK
Introduced since the mid of 70’s, JAMSOSTEK is a compulsory employees’ social security program, which meanwhile has become more popular than other existing pension or retirement programs. Participating conditions as well as benefits are simple and more attractive.
The conception of JAMSOSTEK is to provide basic security and protection to the employees against social-economic risks caused by accident, sickness, disability, retirement and death. The program was originally introduced as ASTEK (Employees’ Insurance) back in the middle of 70’s and through Law no. 3 of the year 1992, JAMSOSTEK as a compulsory social security program was introduced. The operational enforcement was regulated by Government Regulation no. 14 of the year 1993, Presidential Decree no. 22 of 1993 and Decree of the Minister of Manpower no. 5 of 1993. The programs cover work accident, retirement, death and health care security program.
PT JAMSOSTEK, a state-owned business enterprise is commissioned to implement and manage the program and the participants are every legal entity either with a minimum number of 10 employees or paying total monthly salaries or wages of no less than Rp. 1 million; the contribution is payable every 15th of the respective month. Contribution is regulated as follows:
The contribution is calculated based on percentage from total monthly income of the respective employee except for the health care program, where the calculation for the contribution is based on a maximum monthly income ceiling of Rp. 1 million; income exceeding this amount is considered as the maximum income ceiling of Rp. 1 million.
In the course of 2002, more than 21 million employees from more than 106.000 legal entities are active participants of this program and total assets are worth some Rp. 20 trillion. Compensation paid out to participants during 2002 amounted to more than Rp. 1.5 trillion with retirement program being the dominant program with more than Rp. 1.26 trillion in compensation.
1. PENSION FUNDS
Pension funds in Indonesia started in the early 70’s with the Ministry of Finance, Directorate General of Financial Institution, Directorate of Pension Funds functioning as the supervisory body. Pension’s funds are managed by trustees in form of legal entities, mostly in form of a foundation. Typical characteristic for pension funds is that the participation is voluntary. By the end of the year 2001 there are 335 pension funds legal entities providing two pension programs, e.g. defined benefit and defined contribution programs, out of which the defined benefit program is the dominant program, provided by 271 pension funds trustees or institutions. More than 1.5 million employees are participating in pension funds programs and the total net asset value of pension funds at the end of 2001 is exceeding Rp. 35 trillion. Depending on the program, contribution from the participants is ranging from 4.04% to 26.68% from the pension or retirement income.
Pension funds covering civil servants and military personnel are managed separately and are not included in the pension funds schemes mentioned above.
2. JAMSOSTEK
Introduced since the mid of 70’s, JAMSOSTEK is a compulsory employees’ social security program, which meanwhile has become more popular than other existing pension or retirement programs. Participating conditions as well as benefits are simple and more attractive.
The conception of JAMSOSTEK is to provide basic security and protection to the employees against social-economic risks caused by accident, sickness, disability, retirement and death. The program was originally introduced as ASTEK (Employees’ Insurance) back in the middle of 70’s and through Law no. 3 of the year 1992, JAMSOSTEK as a compulsory social security program was introduced. The operational enforcement was regulated by Government Regulation no. 14 of the year 1993, Presidential Decree no. 22 of 1993 and Decree of the Minister of Manpower no. 5 of 1993. The programs cover work accident, retirement, death and health care security program.
PT JAMSOSTEK, a state-owned business enterprise is commissioned to implement and manage the program and the participants are every legal entity either with a minimum number of 10 employees or paying total monthly salaries or wages of no less than Rp. 1 million; the contribution is payable every 15th of the respective month. Contribution is regulated as follows:
The contribution is calculated based on percentage from total monthly income of the respective employee except for the health care program, where the calculation for the contribution is based on a maximum monthly income ceiling of Rp. 1 million; income exceeding this amount is considered as the maximum income ceiling of Rp. 1 million.
In the course of 2002, more than 21 million employees from more than 106.000 legal entities are active participants of this program and total assets are worth some Rp. 20 trillion. Compensation paid out to participants during 2002 amounted to more than Rp. 1.5 trillion with retirement program being the dominant program with more than Rp. 1.26 trillion in compensation.
posted by Zumrowi Yunus at
3:06 PM
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