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This is the new pension fund benefit rules

Reporter: Tendi Mahadi | Editor: Rizki Caturini

JAKARTA. The Financial Services Authority (OJK) released regulations on contributions, pension benefits and other benefits of the new pension fund. Through OJK Regulation (POJK) No. 5/2017, there have been some changes to the rules of the game.

One of them: the limit on the payment of pension benefits that can be paid at once. This rule is different from the previous regulation in the Minister of Finance Regulation No. 50/2012 concerning Pension Contributions and Benefits.

Employer pension fund participants (DPPK) with a defined benefit pension program (PPMP) scheme, payment of benefits at once is made if the monthly benefits of participants are a maximum of IDR 1.5 million or under IDR 500 million all at once.

This lower limit is actually lower than the regulator’s initial design. Previously, participants could take DPPK PPMP pension benefits with a monthly formula of under Rp 1.7 million and a lump sum formula of less than Rp 1 billion.

Dumoly Pardede Deputy Commissioner for Supervision of IKNB OJK said the decision to lower this lower limit was to maintain pension fund liquidity. If it is too high, there is potential for funding difficulties. In addition, withdrawing benefits at the same time certainly makes pension fund assets drop suddenly. “We receive input from the industry so that the existing figures match our capabilities,” he said.

The same is done with the limit of the pension benefit value of the DPPK defined contribution and financial institution pension funds (DPLK). Namely, participants can take pension benefits at once if the participant’s balance is below Rp. 500 million or above Rp. 1.5 billion.

Initially, OJK designed a lump sum pension payment if the participant’s balance was below IDR 1 billion or above IDR 10 billion. Meanwhile, compared to PMK Number 50/2012, the lump sum benefit payment limit applies to under IDR 500 million.

To be sure, Dumoly continued, the change in the pension benefit limit value adjusts the financial needs of participants at retirement. Understandably, the cost of meeting the needs of life is getting bigger. Even monthly retirement benefits are potentially not in accordance with needs.

Executive Director of the Indonesian Pension Fund Association (ADPI) Bambang Sri Muljadi said the new regulation was in line with the wishes of the pension fund managers. Because if the withdrawal of benefits is large, it can disrupt assets.

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