Jamsostek to pay high interest rate for pension program

The Jakarta Post Jakarta

State social security company PT Jamsostek will meet its pledge to pay an interest rate of 8.5 percent on its pension funds this year after a good performance in 2004, the company's president director says.

The rate, 2.5 percent higher than that offered by commercial banks, would be paid to about 24 million workers who contribute to the scheme, Jamsostek head Achmad Djunaidi said on Wednesday.

Djunaidi said the firm's Rp 3.3 trillion (US$360.7 million) profit from its investments last year would finance the payout.

All members of the scheme would start enjoying the higher interest rate this month, he said.

He added that 80 percent of Jamsostek's total assets worth Rp 33 trillion came from the pension funds.

Jamsostek's investments in the stock market and its purchase of bonds and mid-term notes were major contributing factors to the high profit, Djunaidi said.

"The investment in stock markets yielded Rp 489 billion, the purchasing of bonds and mid-term notes was at Rp 1.5 trillion, and the investment in bank savings, properties and mutual funds yielded more than Rp 1 trillion," he said, adding that Jamsostek has always complied with Government Regulation No. 22/2004 on prudent investment policy by investing a larger share of its assets.

He said management would remain vigilant when investing pension scheme money to avoid the kind of losses Jamsostek recently suffered in connection with the Bank Global financial scandal, in which Jamsostek reportedly lost billions of rupiah in investment in the bank.

"We will remain prudent when investing because Jamsostek's assets, which are invested in numerous schemes, belong to workers and the investment yields are accumulated to help improve workers' social welfare," he said.

Separately, director of operations and services Indra Haryadi said along with raising the pension funds' interest, Jamsostek would increase workers' compensation for occupational accidents.

"We are still formulating a mechanism to increase the occupational accident compensation and reviewing the health care program without having to increase workers' premiums," he said.

He said it would be untenable for Jamsostek to increase the workers' premiums because the slow economic growth in the country had already led to a decrease in the number of workers participating in social security programs.

Workers with the support of their employers have contributed almost 7 percent of their gross monthly salaries to Jamsostek's life insurance, accident compensation and pension packages.