3 INDONESIA’S CURRENT SOCIAL PROTECTION
3.3 Implementing contributory schemes
The child welfare program – Program Kesejahteraan Sosial Anak
Progam Kesejahteraan Sosial Anak (PKSA) has been operating since 2009 and targets displaced and abandoned children, children with disabilities, juvenile delinquents, children requiring special protection and street children. The objective is to help beneficiaries access schools, health facilities and social rehabilitation services. The program provides IDR1.5 million per year per eligible child.121 There were 77,430 beneficiaries in 2017, down from the 110,610 in 2016, but the program is expected to reach 100,482 children in 2018.
However, more than four million children are estimated to have social welfare issues and these children are eligible for the program.122 A rapid assessment conducted in 2015 showed that the program has increased beneficiary children’s access to basic education services and increased parents’ involvement in the care and protection of their children (such as better interaction with their children, better provision of economic support, among others).123
126 Existing schemes, such as the social insurance for employment (PT Jamsostek) and the state pension fund were consolidated into the Social Security Agency for Employment.
127 BPJS Ketenagakerjaan, https://www.bpjsketenagakerjaan.go.id/page/Program-Jaminan-Hari-Tua-(JHT).
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128 BPJS Ketenagakerjaan, https://www.bpjsketenagakerjaan.go.id/jaminan-pensiun.html
Subsequently, Law No 24 of 2011 stipulated that the agency could further divide into the Social Security Agency for Employment (BPJS Ketenagakerjaan) and Social Security Agency for Health (BPJS Kesehatan).126 These agencies and their respective schemes are described in turn.
3.3.1 Employment insurance programs – Jaminan Ketenagakerjaan
Social security for employment is managed by the Social Security Agency for Employment (BPJS Ketenagakerjaan) which provides old age savings with disability benefit (JHT), survivors’ benefit (JKM), work injury compensation (JKK) and elderly pensions (JP). If members contributing to the JHT program reach retirement age or experience permanent disability resulting in job loss, they are entitled to withdraw their full contributions. Those who reach retirement age are obliged to withdraw the full amount at one time, meaning that the program acts as a savings program for old age rather than a regular pension. Members who experience severe disability and are no longer able to work are entitled to a monthly benefit (based on their contributions) until their death. In 2015, just 249 people were being compensated for work-related disabilities. JHT contributors can also partially withdraw their funds before retirement age if they have been contributing members for 10 years.127
The elderly pension (JP) acts as a regular pension for the elderly and can be withdrawn on a monthly basis if the member has contributed for at least 15 years and reached retirement age.128 However, it will be some time before the program can deliver adequate old age pensions to its members. If members enrol in 2018, the earliest that they will access any old age pension will be 2033 but this is likely to be low due to the limited time they will have saved. It will not be before 2040 that members will receive a reasonable pension and, even then, only a small proportion of older people will benefit, given the low number of current contributors.
The Social Security Agency for Employment offers the four insurance programs to two groups: wage-recipient workers (pekerja penerima upah – PPU) and non-wage recipient workers (bukan penerima upah – BPU). Wage-recipient workers include formal sector employees while non-wage recipient workers include informal or self-employed workers.129 Participation in all programs is mandatory for wage-recipient workers, excluding civil servants, military personnel and the police. However, based on the existing regulation (Regulation No 109 of 2013), if non-wage recipient workers wish to contribute to the old age savings with disability benefit scheme (JHT), they must join the survivors’ benefits and work injury compensation schemes (JKM and JKK) as pre-conditions. Additionally, non-wage recipient workers are unable to contribute to the elderly pension (JP). While all programs are important for protecting citizens against various risks, the elderly pension is particularly critical in enabling working age citizens to save for their old-age retirement.
However, this regulation has created practical barriers to achieving this for the informal sector.
In an effort to increase non-wage recipient workers membership, the Social Security Agency for Employment allows non-wage earners with minimum reported earnings of IDR 1,000,000 to contribute to the schemes at the specified monthly contributions, as follows (JKK and JKM are mandatory):
• JKK (work incident benefit), IDR10,000
• JKM (survivor’s benefit), IDR6,800 and;
• JHT (old age and disability insurance), a minimum of IDR20,000.130
Given the limited capacity for people in the lower deciles to contribute, the Social Security Agency for Employment has proposed that the government subsidise JKK and JKM for the ‘poor and at-risk’.131 While this is a start, those engaged in informal work have different social security needs and priorities from those in the formal sector. For instance, work- related injuries may not be of benefit to all non-wage recipient workers,132 particularly for agricultural workers in rural areas who may not have formal employers, but old age and disability risks usually place the greatest burden on low-income earners.
129 Wage-recipient workers (pekerja penerima upah – PPU) are any workers who work for salaries, wages or other forms of remuneration from an employer.
Non-wage recipient workers (bukan penerima upah – BPU) are those who carry out economic activities or businesses independently to earn income from their activities or businesses. This includes: the self employed;
workers outside formal employment or independent workers; and workers who do not do not receive wages from formal employment, for example motorcycle or taxi drivers, public transport drivers, mobile traders, doctors, lawyers or advocates, artists, and so on.
130 There are several premium options for JHT membership.
131 The budget for this proposal is IDR5.6 trillion and based on the Social Security Agency for Employment
133 Social Security Agency for Employment (September 2017)
134 Asher (2011)
135 World Bank (2011); Government regulation no 37 of 2014 on the pension eligibility for civil servants and their widows or widowers
ACTIVE MEMBERS : 24.096.776 JKK & JKM
(Work Injury Compensation &
Survivor’s Benefit)
JHT
(Old Age Savings With Disability Benefit)
JP (Elderly Pension)
Company 496,709 117% YoY Individual
Members 24,096,776 117% YoY
Company 388,015 113% YoY Individual
Members 14,322,418 106% YoY
Company 122,896 139% YoY Individual
Members 10,306,561 119% YoY
Table 2: Coverage of employment insurance under the Social Security Agency for Employment133
3.3.2 Pension for civil servants and military or police personnel managed by PT Taspen and PT Asabri
Civil servants in Indonesia have been offered pension benefits since 1969. There are two different pension funds. One fund, PT Asabri, caters for employees in the military, police and Ministry of Defence. The other, PT Taspen, caters for all other government employees and employees of state-owned enterprises. Both programs offer pensions and survivors’ benefits as well as a life and endowment insurance known as Tunjangan Hari Tua (THT) which pays out a lump sum at retirement age or in the event of death during employment.134 The retirement age for civil servants and state-owned company employees varies by position but most retire at 56 or 60 years. Employees with at least 20 years of employment can choose to retire earlier.
The age of retirement and pension withdrawal varies from 58 to 60 years for civil servants and state-owned company employees, depending on position. Those who have contributed service of over 20 years are also eligible to withdraw their pension once they are over 50. Pensionable earnings vary greatly by position but on average retired civil servants receive about 70 to 75 per cent of their last monthly earnings. In addition, pensioners also receive a rice allowance and once retired they continue to receive 100 per cent of this allowance regardless of the number of years of service.135 Besides the retirement pension, there are disability and survivors’ benefits regardless of whether the disability or death occurred at work.
136 PT Asabri (2016); Latest figures available at the time of writing
137 Finansial (2017)
138 PT Asabri (2016)
139 It is not possible to give pre-transfer distribution as Susenas does not give the value of the pensions received.
In 2016, PT Taspen paid out benefits to 2.2 million members and PT Asabri paid out to 48,407 members.136 In October 2017, PT Taspen had approximately 6.7 million members made up of 4.2 million active civil servants and 2.5 million retired civil servants.137 In 2016, PT Asabri had 936,835 members in total and 438,411 of these were from the Indonesian national police.138
Figure 40 shows the distribution of pension recipients across the wealth distribution, post- transfer.139 While most recipients are among the better-off households, around 17 per cent of all recipients are in the poorest half of the consumption distribution, indicating either that their pensions are small or that they support a large number of people. Those in the poorest deciles are likely to require additional financial support.
Figure 40: Distribution of (mainly civil service) pensions across consumption deciles, 2016
Portion of all pensioners in each consumption decile
poorest 2 decile 3 decile 4 decile 5 decile 6 decile 7 decile 8 decile 9 decile richest
Source: Susenas (2017)
3.3.3 National health insurance – Jaminan Kesehatan Nasional
The government established the national health insurance program, Jaminan Kesehatan Nasional (JKN) on 1 January 2014, bringing together all the health insurance programs under the Social Security Agency for Health (BPJS Kesehatan). These included PT Askes for civil servants, Jamsostek for the private sector, PT Asabri for the police and military and Jamkesmas for the poor and insecure. By August 2017, the Social Security Agency for Health had 179.5 million participants, making it the largest health administrator in the world.140 As Table 3 indicates, central and local governments fully subsidise 109.5 million individuals’ contributions to the program or 61 per cent of the total.141 The remaining 39 per cent are either public employees, private sector salaried workers and others who make their own contributions.142 Recipients can access all available healthcare services and facilities.143 However, due to limited investment in the health sector, the quality of services many beneficiaries receive is limited.
Table 3: Beneficiaries of the national health insurance program, 2014–2017
Group 2014 2015 2016 2017
Fully subsidised beneficiaries of the national health insurance program (under the
national budget) 86,400,000 87,828,613 92,400,000 92,222,999
Fully subsidised beneficiaries of the national health insurance program (under the local government budget)
8,767,229 11,170,615 17,721,565 17,265,655
Contributing civil servants, military and
police employees 14,249,741 15,415,428 15,460,186 N/A
Contributing PPU employees 10,077,408 22,447,094 37,767,932 N/A
Other contributing members 13,929,275 19,928,537 25,350,868 70,014,810
Total 133,423,653 156,790,287 188,700,552 179,503,464
140 At the time of publication (September 2018), the number of Social Security Agency for Health members was approximately 201.6 million individuals, see https://bpjs-kesehatan.go.id/bpjs/index.php/jumlahPeserta
141 Ministry of Finance and Ministry of National Development and Planning (2017)
142 Social Security Agency for Health (August 2017)
143 World Bank (2017)
N/A = Information not available PPU = wage recipient workers
Source: Social Security Agency for Health (August 2017)
144 World Bank (2015)
The design of the health insurance program has been challenging and its financial sustainability is under threat.144 Many people only pay their contributions when they become ill and stop paying when they recover, leading to a major deficit in the program.
By December 2014, the claims for contributing members were more than 600 per cent higher than their contributions.