Safeguarding Participant Rights During Pension Fund Liquidation

Protecting pension funds is not merely about the amount of money available, but whether the system can safeguard workers’ rights when the institutions supporting them face extreme hardship.

Jakarta (ANTARA) - What should happen when a company undergoes liquidation, while its ecosystem contains a pension fund that has collected contributions from employees and employers for many years?

A pension fund is not just a part of corporate administration. It contains the economic rights of workers, built up throughout their years of service to guarantee income certainty upon reaching retirement age.

The case of PT Asuransi Jiwasraya (Persero) serves as a case study for how these protection principles should function. Following the escalation of Jiwasraya’s issues—from policy restructuring to company liquidation—another dimension has drawn public attention: the settlement of the Jiwasraya Employer Pension Fund (DPPK).

The Financial Services Authority (OJK) has dissolved the Jiwasraya DPPK and DPLK since 16 January 2025 and has appointed liquidators to carry out the settlement process. This situation provides an important lesson: the dissolution of a pension fund is not identical to the termination of participants’ rights.

In an ideal condition, liquidation should function as a mechanism to clarify all legal and financial positions. This includes identifying the amount of available assets, obligations to participants, recoverable receivables, funding shortages, and the parties legally responsible for the settlement.

Legal practitioner at BP Lawyers Counselors at Law, Bimo Prasetio, stated that several principles must be maintained in cases involving pension funds and workers’ rights. The first principle is the separation of assets. The employer and the pension fund are two distinct legal entities.

Although the DPPK is established by the employer, the pension fund’s assets do not automatically become part of the founding company’s assets. This separation is crucial when a company faces financial distress. Pension assets are, in principle, intended to fulfil obligations to participants and entitled parties.

Therefore, these assets should not be treated simply as part of the company’s assets to be used for settling all corporate liabilities. The Jiwasraya case demonstrates why this boundary must be clear. PT Asuransi Jiwasraya is an insurance company currently in the liquidation process. The Jiwasraya DPPK is a legal entity managing a pension programme, while IFG Life has received the transfer of Jiwasraya’s policy portfolio as part of the restructuring.

While all three are part of a single sequence of events, their respective legal relationships cannot be conflated. The transfer of a policy portfolio to IFG Life, for instance, does not automatically imply the transfer of all employee pension fund obligations. To determine whether such responsibility exists, one must examine the scope of transferred assets and liabilities, the transfer agreements, and regulatory approvals.