In 2011, the Indonesian Government reformed its National Social Security System and passed Law No. 24 on the Social Security Organizing Body (Badan Penyelenggara Jaminan Sosial or “BPJS”) (the “BPJS Law”) to help meet the basic needs of the country’s population.
The types of social security programs mandated under the BPJS Law are as follows:
- Health Care Security;
- Work Accident Security;
- Old-Age Security;
- Pension Security; and
- Death Security.
BPJS of Health: Health Care Security is managed by BPJS of Health and is intended to cover all employees and residents (including foreign residents after working in Indonesia for six months) under a single health care system.
BPJS of Employment: Employment Security, including work accident, old-age, pension, and death benefits, is managed by BPJS of Employment.
All employees in Indonesia were required to register with BPJS by 1 January 2015. Everyone else must register by 1 January 2019.
Employer Required Retirement Plans/Schemes
Employers are required to enroll employees in the old-age security and pension programs under BPJS of Employment. Also, employees are entitled to enhanced statutory minimum termination benefits upon reaching the retirement age. No other retirement plans/schemes are required.
Given the mandatory old-age security and pension programs under BPJS of Employment, and the additional generous statutory minimum termination benefits upon reaching the retirement age, supplementary private pension plans are not commonly provided by employers in Indonesia.
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