Pension for State Officials to Undergo Complete Overhaul; Constitutional Court Rules Old Regulations Outdated
The Constitutional Court (MK) has ordered Parliament and the Government to promptly revise legislation concerning the financial rights and pensions of state officials. The court determined that the current regulation, Law No. 12 of 1980, is outdated (out of date) and no longer aligns with Indonesia’s state system following the amendments to the 1945 Constitution.
The Constitutional Court partially granted the plaintiffs’ challenge against Law No. 12 of 1980 and provided a maximum two-year deadline for lawmakers to develop new regulations, including pension schemes for former state officials.
The decision was announced during court proceedings case No. 191/PUU-XXIII/2025 at the Constitutional Court building in Jakarta on Monday, 16 March, with legal considerations presented by Deputy Chief Justice Saldi Isra.
According to the court, the law enacted in 1980 no longer conforms with developments in the state institution system following the 1945 Constitutional amendments.
“The plaintiffs’ argument that Law 12 of 1980 has lost its relevance (is outdated) is well-founded,” said Saldi when reading the court’s considerations.
The Constitutional Court found that certain provisions in the law still govern the financial rights of leaders of the People’s Consultative Assembly (MPR) who came from regional representatives and functional group representatives. However, the structure of the MPR has changed since the constitutional amendments.
Currently, MPR members consist only of members of Parliament and members of the Regional Representative Council selected through general elections, so there are no longer any regional or functional group representatives.
“With the absence of regional and functional group representatives in the MPR, there are no longer MPR leaders from these categories,” said Saldi.
As a result, provisions concerning salaries, allowances, and administrative rights previously intended for these categories no longer have a constitutional basis.
The court also found that Article 4, paragraph (1) of the law governing honorariums for MPR members who are not parliamentary members is no longer relevant because the MPR membership system has changed.
Although some provisions are deemed outdated, the Constitutional Court emphasised that regulations concerning salaries, allowances, and pension rights for state officials remain necessary. However, the regulations must be updated to align with the current state system.
“It is important to enact new legislation that can accommodate the need to regulate financial and administrative rights of leaders or members of state institutions,” said Saldi.
The court has granted a maximum two-year period for Parliament and the government to enact replacement legislation. During this period, the old law remains in force to maintain legal certainty.
However, if the law is not replaced within two years, it will automatically lose its binding legal force.
In its decision, the Constitutional Court provided several directives to Parliament and the government when drafting the new legislation.
First, the new regulation must distinguish between types of state officials, such as officials selected through general elections (elected officials), officials selected through competency assessment (selected officials), and officials appointed such as ministers (appointed officials).
Second, the regulation must ensure the independence of state officials so that they can perform their duties without pressure that could affect their integrity.
Third, the amount of salary, allowances, and the mechanism of their provision must be proportional and accountable, whilst considering the socioeconomic conditions of society.
Fourth, the Constitutional Court also requested lawmakers to reconsider the model of granting rights after the end of office, including the possibility of replacing the pension system with an honorarium provided once after the term of office ends.
Finally, the court emphasised that the process of drafting the new legislation must involve meaningful public participation, particularly from community groups concerned with state financial management.
With this decision, the Constitutional Court determined that the old rules concerning pensions and financial rights of state officials need to be updated to align with the current state system and to be more transparent and accountable in the use of state finances.