Securing your twilight years

Securing your twilight years

JAKARTA (JP): To date only some 350 out of millions of
companies in this country have established the pension fund DPPK
(Employer Sponsored Pension) for their workers to afford them
financial security on retirement.

The DPLK (Financial Institution Pension Fund), on the other
hand, has less than 0.5 percent of the country's 210 million
population as members.

It is estimated that only 6.5 percent of Indonesia's 90
million workers are investing a portion of their wages in pension
funds.

Why is this so?

Generally, most Indonesians focus on how to survive this week,
this month and next month, at the most.

Some argue that most workers, including the white-collars, in
this country are ignorant about the financial security that
pension funds offer during retirement. Others say, albeit
jokingly, that Indonesians are so serious in their work that they
do not have the time to think about retirement. Some believe
workers here simply see retirement as a distant, future problem.
Today is today.

Only a small number of people realize that being a pension
fund member is beneficial. It's a sacrifice indeed, since a
portion of the money earned has to saved for the future, which
for some people is uncertain.

But if you firmly believed that "today is today", it might
mean that you are putting your future financial independence on
the line, or if you have any -- your children.

According to Paul Srilaksono, secretary-general of the
Indonesian Pension Funds Association (ADPI), whose members
consists only of DPPKs, the small number of DPPKs in the country
are also due to a lack of will and participation on the part of
employers.

"The awareness that employees have the right to proper
benefits at retirement is still low among employers," Srilaksono
told The Jakarta Post on Friday.

Some employers, he explained, blamed the economic crisis for
blocking their plans of setting up a DPPK for their staff.

Is this reasonable?

"Actually, a company can urge their workers to register at
DPLKs to secure their future," Srilaksono said. "So, a worker
does not need to depend on DPPK for pension benefits."

There is no bureaucratic red tape or complications in setting
up a DPPK, he said.

"Just go to the Ministry of Finance. It's so easy," Srilaksono
said.

Based on Decree No. 227 issued by the Ministry of Finance in
1993, a company owner/founder has to fill Form A which will be
sent to the minister of finance along with several required
documents, including papers signed by the owner/founder stating
the establishment of the pension fund; the appointment of the
fund's executives, supervisors and custodian of the fund's
assets; and the investment directive of the fund.

The establishment of a DPLK is regulated in the ministry's
Decree No. 228 issued in the same year.

The regulation requires, for instance, a life insurance
company which intends to run pension fund services to have, among
other things, a good level of solvency in the past two years at
least, a healthy investment mechanism, and been in the business
for at least five years.

A public bank intending to do the same would have to show that
it has been healthy the past two years.

Despite the sluggish economic growth, amid the bickering among
Indonesia's political elite, many believe that pension funds
would boom in the next few years.

"The awareness of workers' rights and the importance of
preparing for one's retirement will be greater than they are
today," said Chris Bendl, managing director of Manulife Asset
Management Indonesia.

Rather than relying on their employer, he added, "people will
increasingly want to take personal responsibility for their
retirement security."

Bendl suggested the government could assist the private sector
in promoting private pension schemes by enforcing the pension
rules stringently and harmonizing interdepartmental legislation
such as the Manpower Law on severance pay and the tax
department's policies on income taxes, as well as giving the
private sector workers the option of opting out of Jamsostek
(social security).

A 1997 survey on Asian ideals, including those in Indonesia,
by MasterCard, found that 80 percent of the people polled hoped
that they would be able to live independently in their own homes
when they retire. The survey shows that Asians have changed their
perspective of retirement which in the past meant "living
together with the children".

So think ahead and make provisions for the future. Don't
forget that life actually begins at 45! (K. Basrie and Darul
Aqsha)