Men work at a construction site without proper safety equipment. The government has made it mandatory for companies to register employees to join the universal social security scheme provided by The Social Security Administration Body for Employment, or BPJS Ketenagakerjaan. (Antara Photo/Nova Wahyudi)
Cilacap. The Social Security Administration Body for Employment, or BPJS Ketenagakerjaan, began full operations on Wednesday as a government body exerting more power in protecting rights of employees at work and enabling the body to capture millions more of workers unprotected under the mandatory universal pension program.
President Joko Widodo, accompanied by Puan Maharani, the chief welfare minister, and Maritime Affairs and Fisheries Minister Susi Pudjiastuti and other government officials, attended the inauguration ceremony at the Teluk Penyu fishing village in Cilacap, Central Java.
“Starting July 1, 2015, all workers [in the country] must become a member of the universal social security scheme provided by BPJS Ketenagakerjaan. Employers, workers must work together to make this program successful,” Hanif Dhakiri, the manpower minister, said at the ceremony.
The minister noted the full legal transformation of the body — previously a state pension fund called Jamsostek — into a non-ministry government agency supervised directly by the president.
BPJS Ketenagakerjaan also has the authority to monitor companies operating in the country to ensure registration of employees into the compulsory social security scheme. The full status also allows the body to start insuring workers without a regular salary. These workers are known as informal-sector workers.
Now, the body that was formed after mergers of Jamsostek with two state pension funds — Asabri, servicing police and military personnel, and Taspen, a civil servant fund — provides four insurance services: occupational accidents, saving for old age and death insurance and pension scheme.
The funds of the pension scheme will be disbursed to workers after they reach the pension age of 56, experience permanent disability or die — which in this case the funds will be given to the worker’s spouse.
The money will be disbursed monthly until the person or the spouse dies.
Saving for old age is a program that differs from the pension as money is given in lump sump or the total accumulation of the savings plus the investment yields to the beneficiary, also after they reach pension age.
The Indonesian government has made it mandatory for companies to register employees, including expatriates, with the Employee Social Security program, regardless of programs and policies in place in their home countries.
“With this [scheme], workers can live their old age peacefully,” Elvyn G. Masassya, the body’s president director, said at the ceremony. President Joko Widodo (second from right) was delivering his key note speech at a ceremonial event that marked the full transformation of The Social Security Administration Body for Employment, or BPJS Ketenagakerjaan, fully operate into a government body, which gives more power in protecting rights of employees at work. (Antara Photo/Rusman)
President Joko Widodo, second right, speaks at a ceremony to mark the full transformation of the Social Security Administration Body for Employment, or BPJS Ketenagakerjaan, into a government body, which gives it more power in protecting the rights of employees at work. (Antara Photo/Rusman)
BPJS Ketenagakerjaan registered 17.16 million workers as its members and manage around Rp 203 trillion ($15.2 billion) worth of funds under its management, according to data from the end of May. This already makes the body the biggest institutional investor in Indonesia.
Elvyn, who has lead the former state enterprise since 2012, reiterated his target to boost the government body’s funds under management to Rp 500 trillion by 2019.
He also said that with the full legitimate status, BPJS Ketenagakerjaan could tap 31.8 million more potential members who work in the formal sector and 66.7 million workers without regular salary.
Indonesia, Southeast Asia’s largest economy has around 110 million strong workforce, of which less than half are classified as formal workers, according to the Central Statistics Agency data.
BPJS Ketenagakerjaan, supported by about 4,000 staffers now operates 11 large regional branches, 121 full branches and hundreds of thousands of outlets through cooperations with retailers, banks and post offices.
“There are more than 200,000 point of services of BPJS Ketenagakerjaan in Indonesia,” said Elvyn.
He added that to ease its service, especially to simplify verification process over insurance claims, the body cooperates with the internal affairs ministry and public administration body.
In addition to providing social security insurance scheme, BPJS Ketenagakerjaan is also working out to provide basic welfare needs like housing, foods and transportation.
Elvyn has previously said the government body plans to invest about Rp 20.4 trillion for development of affordable housing; rental apartments (Rusunawa) and lower cost apartments (Rusunami).
The body is working its way to develop the membership card to have many other functions, including enabling it to function like e-money for customers to access some public services like toll roads or subsidized foods, like rice.
Raising pension contribution rate
At the same occasion, Elvyn confirmed that the pension contribution of an employee’s monthly salary is 3 percent, of which 2 percent is paid by employees with workers paying the remaining 1 percent.
The president director said, citing a government regulation, employees need to be registered in the universal pension program for at least 15 years before making use of the pensions.
“In the next three years, the contribution will be reviewed and it will gradually be increased to 8 percent, depending on the economic situation,” Elvyn said.