Constitutional Court Rules Voluntary Pension Funds Can Be Disbursed as Lump Sum

The Constitutional Court (MK) has partially granted a judicial review of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK), ruling that voluntary pension benefits can be paid out as a lump sum. The decision, read out in a session on Monday, stated that Article 164 paragraph (1) letter d of the P2SK Law is conditionally unconstitutional unless it is interpreted to allow lump sum or periodic payments for voluntary pension benefits formed from severance pay, long service pay, and compensation for rights. The case was brought by eight workers and retirees, including Lukas Saleo and Haeruddin Fallah, who argued that the mandatory periodic payment requirement for voluntary, complementary private pension funds violated their constitutional rights. The applicants, who worked for companies such as PT Freeport Indonesia and PT Unilever Indonesia, claimed they suffered real and potential losses because they could not access their pension benefits in a lump sum. The court noted that its decision aligns with a previous ruling, Number 139/PUU-XXIII/2025, which had already declared related provisions unconstitutional, thereby ensuring consistency in the legal framework for pension fund disbursements.