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BPJS raises pension age to ensure its long-term solvency
Pension age hike could result in a longer “waiting period” for workers who retired before the age of 59, delaying their access to the state-run pension program’s benefits.
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Retirees line up receive their monthly pension payments in Jakarta on Feb. 15, 2011.
(Courtesy of Kontan/Baihaki)
T
he Workers Social Security Agency (BPJS Ketenagakerjaan) has raised the age of eligibility for its pension benefits by a year to 59 as part of a triennial adjustment to keep the agency’s finances in shape at the cost of delayed benefits for workers.
Since the program’s inception a decade ago, the agency has raised the pension age three times from the initial age of 56. A government regulation requires BPJS Ketenagakerjaan to gradually increase the retirement age to 65 by the end of 2045.
Private companies, however, are not compelled to adhere to the BPJS Ketenagakerjaan pension age for their own retirement policies, leaving the question of retirement age up to individual employment agreements. Civil servants, meanwhile, have a separate pension age policy that depends on the official’s rank.
The BPJS Ketenagakerjaan figure defines only when workers are eligible for the agency’s pension benefits, paid every month or in a lump sum to eligible recipients.
Indonesian Employers Association (Apindo) chair Shinta Kamdani said in a statement on Jan. 9 that the pension age hike could result in a longer “waiting period” for workers who retired before the age of 59, delaying their access to the state-run pension program’s benefits.
She said efforts to improve financial literacy among the impacted workers would be necessary, which could require collaboration between the government and employers.
Labor groups have raised concerns that the pension age increase will discourage young workers from entering the formal job market, but Shinta said that was unlikely to happen and that it would depend on the specific conditions and business strategies of individual companies.
