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Compulsory program benefits are not maximal

Reporter: Andri Indradie, Lisa Riani, Merlina M. Barbara, Tedy Gumilar | Editor: Tri Adi

Long before the Government Regulation on the Old Age Security program and the PP regarding the Pension Security program were issued and it caused a polemic, businessmen were already complaining loudly. The government is considered to impose excessive obligations related to the pension funds that the company must provide for its employees.

Based on this regulation, the company and its employees are required to participate in paying the JHT fund contribution and the pension security program. Apart from that, there are also death benefits and work accident benefits run by the Employment Social Security Administration (BPJS).

There are still more obligations to pay severance pay, period of service pay (UPMK), and compensation for rights (UPH) based on the Manpower Law.

The total amount of contributions that must be borne by the company is between 16.24% -18.74% of the monthly wages of its workers. Meanwhile, the share of contributions that must be borne by workers alone reaches 6%. That way, the total mandatory contributions paid by the company and employees together, and managed by BPJS, reach around 22.24% −24.74%.

This does not include the 5% contribution to the health care insurance program managed by BPJS Health.

In fact, the heavy burden that must be borne by the entrepreneur does not meet the ideal pension fund needs for his employees. If we use the calculations made by Steven Tanner, the mandatory old-age welfare program for employees is only able to provide a retirement income level (TPP) of 54.7%.

In fact, continued the principal and actuary Dayamandiri Dharmakonsilindo, experts estimate that the TPP that is considered adequate to maintain the same quality of life for retirees when he was still working ranges from 70% to 80%. This means that 15.3% to 25.3% of the TPP is still insufficient for someone to maintain a decent life during retirement.

The TPP benchmark is taken from the last income of the worker just before retiring. However, actuary Padma Raya Aktuaria Risza Bambang assessed that the ideal benchmark should be based on expenses or living expenses. Because, the financial needs that must be met by retirees will not be as big as when they were still productive.

For example, a person with a work period of 30 years and has a wage just before retirement of IDR 3.5 million a month. So, said Steven, the person concerned is entitled to severance pay of 2 times the severance pay plus 1 time the Employment Award Fee (UPMK) plus Rights Replacement Money (UPH).

In total, the severance pay that can be enjoyed is Rp. 112.7 million. “The TPP obtained is 15%,” said Steven.

JHT contributed 9.7%. Additional pension funds came from the JHT program. The contribution reached 5.7% of wages. With a contribution period of 30 years, the TPP that can be generated is only around 9.7%.

The next contribution comes from the pension security program which is also managed by BPJS Ketenagakerjaan. The calculation formula is regulated in Government Regulation (PP) No. 45 of 2015 concerning the Implementation of the Pension Security Program. With the benchmark of the same tenure, the TPP earned is around 30%.

Tunjung Ari, an employee of the state-owned company, PT Dasaplast Nusantara, has objections if the TPP that the mandatory government programs can produce does not reach the ideal level. He hopes that the government can compile regulations that make the TPP reach 80% of employee income.

However, Risza considered that the shortcomings of the TPP should be the responsibility of each employee. This is done by preparing a retirement fund from an early age and adjusting his lifestyle from a young age. “It’s not fair when he works his life is luxurious. Then when he retires he hopes from the government and companies, “said Risza.

What should be noted, JHT benefits and severance pay are given at once. Unlike the benefits of pension insurance programs that are given every month. So, if you are not very good at managing and controlling yourself, you might run out of money before you die.

The payment of severance pay and UPMK up front also has consequences for tax obligations. Based on PP No. 68 of 2009,
severance pay recipients will be subject to final income tax (PPh) article 21.

Imposition is also progressive. If the value is 0 to IDR 50 million, it is not taxed. Above IDR 50 million to 100 million are subject to 5% PPh. More than IDR 100 million to IDR 500 million is subject to 15% tax. And Rp. 500 million and above must pay Income Tax Article 21 of 25%.

Apart from severance pay, the JHT money that you receive is also subject to Income Tax Article 21. The rate is, 0% on gross income up to IDR 50 million. The 5% income tax rate for JHT is more than IDR 50 million.

Another problem, the PP on pension guarantees regulates the increasing retirement age. The regulation said, the retirement age was set at 56 years old. But starting January 1, 2019, it will increase to 57 years. Furthermore, the retirement age increases by 1 year for every 3 years until the retirement age is 65 years.

If the employing company conforms to these rules, of course there will be no problem. But if not, the consequence is that workers who are retired by the company will not immediately receive their pension security money.

Take, for example, if you are currently 40 years old and working at a company that still applies the retirement age provisions when the employees are 55 years old. So, based on this provision, the pension age applicable to the BPJS Ketenagakerjaan pension program has reached 61 years. So, when you retire in 2032, you will have to wait another six years before you can receive the pension security deposit.

Main Report
Weekly Cash No.42-XIX, 2015

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