Pension Guarantee (JP) and Old Age Security (JHT) in Indonesia

What are the differences between Pension Guarantee (Jaminan Pensiun) and Old Age Security (Jaminan Hari Tua)? JP is crucial for companies to consider. Pension refers to the period after one stops working, potentially leading to reduced income. Insufficient preparation can cause financial challenges in retirement.

To address this, BPJS Ketenagakerjaan offers JP and JHT to ensure comfort in old age. Indonesia's retirement age starts at 58 and increases yearly, up to 65. Read on for more on JP vs JHT.

Old Age Security (JHT) itself is a cash benefit given once participants reach retirement age, which is 56 years, or upon death or permanent disability. Employers are required to enroll their employees in the JHT program.

Referring to Article 4 of Government Regulation No. 46 of 2015, the criteria for JHT program participants include:

Wage recipients working for employers other than state organizers, including:

1. Employees of companies
2. Workers for individuals
3. Foreigners working in Indonesia for a minimum of 6 months

Non-wage recipients include:

1. Employers
2. Workers outside of employment relationships or self-employed workers who do not receive wages

The amount withdrawn is the accumulation value of contributions paid during employment. However, participants can also withdraw part or all of their JHT funds if they are currently unemployed for various reasons, such as resignation or layoffs.

Here are the criteria for claiming JHT:

• Retirement age of 56 years

• Resignation

• Termination of Employment (layoffs)

• Leaving Indonesia permanently

• Permanent total disability

• Death

Pension guarantee, initiated by the Social Security Organizing Agency (BPJS) since July 1, 2015, alongside Work Accident Insurance (JKK), Death Insurance (JKM), and Old Age Security (JHT), ensures a decent standard of living for participants. According to Government Regulation No. 45 of 2015, Article 1, it provides income post-retirement, permanent disability, or death, through monthly cash payments to eligible participants or their heirs.

Participants, whether from companies or self-employed, must register or update their details by age 57. If changing jobs, employees should inform their new employer using their BPJS Ketenagakerjaan card to continue participation automatically.

Contributions are 3% of monthly salary, with employers paying 2% and employees 1%, based on a maximum salary of Rp8,512,400.

As discussed earlier, this program provides benefits to participants or their heirs, as follows:

Old age pension benefits

Monthly cash benefits given to participants who have completed a minimum of 15 years of contributions or equivalent to 180 months upon reaching retirement age until death.

Disability pension benefits

Participants who become permanently disabled due to an accident, making them unable to work or even resulting in death, will receive monthly cash benefits.

Widow/widower pension benefits

Pension Guarantee (JP) benefits in the form of monthly cash payments given to widows or widowers who are heirs and registered with BPJS Ketenagakerjaan until death or remarriage.

Child pension benefits

Monthly cash benefits given to children who are heirs of participants until the child reaches the age of 23, or starts working, or gets married.

Parent pension benefits

Cash benefits given to parents (father/mother) who are heirs of single participants.

Those are the differences between JP and JHT. For a better and well-prepared old age comfort, don't hesitate to register with BPJS Ketenagakerjaan.

What are the differences between JHT and JP?

JHT contributions are paid by employers at 3.7% of monthly wages plus 2% paid by employees. Meanwhile, JP contributions to BPJS Ketenagakerjaan are paid by employers at 2% of monthly wages and by employees at 1% of monthly wages.

When can JP be withdrawn?

Pension Guarantee can be withdrawn before retirement.

According to Government Regulation (PP) No. 45 of 2015 regarding the Implementation of the JP Program, the retirement age starting January 1, 2019, is set at 57 years. This retirement age increases by one year every three subsequent years until reaching 65 years.

When can pension benefits be claimed?

JHT benefits can be claimed anytime without a membership duration limit, whereas Pension Guarantee benefits can only be claimed by workers who have reached retirement age, which is over 56 years old.

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• Hiring Employees in Indonesia: Employment Laws and Regulations

• Payroll System in Indonesia: Rules, Regulations, and Compliance

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