Indonesia has introduced a new regime of national social security. We take a look at the new social security administrators and the key legislative changes.
New social security administrators
Under the new regime, there are two social security administrators, which are the Manpower Social Security Administrator (BPJS Ketenagakerjaan or “Manpower BPJS”) and the Health Social Security Administrator (BPJS Kesehatan or “Health BPJS”). Both administrators are answerable to the President of the Republic of Indonesia and both administrators have commenced their operations on 1st January 2014. The Manpower BPJS replaced the role of PT Jamsostek Persero in administering work accident, old age, pension and death benefits, while the Health BPJS replaced the role of PT Askes Persero in administering health benefits. Law No. 24 of 2011 on Social Security Administrators (“Social Security Administrators Law”) mandates that both Manpower BPJS and Health BPJS must be able to provide their full service by 1 July 2015.
The key points outlined in the Social Security Administrators Law are:
- The Manpower BPJS administers work accident, old age, pension and death benefits. This role was previously carried out by, amongst others, PT Jamsostek Persero but since the start of operation by the Manpower BPJS, PT Jamsostek Persero does not carry out this function anymore.
- The contribution amount payable to the Manpower BPJS is the same as the contribution amount under the existing Manpower Social Security Law No. 3 of 1992 (the “Jamsostek Law”), i.e. calculated by reference to the employee’s wage. The current contributions are:
Click here to view table.
- The Health BPJS administers health benefits that were previously administered, amongst others, by PT Jamsostek Persero and further enhances the nation’s health benefit system.
- With the operation of the Manpower BPJS and the Health BPJS, PT Jamsostek Persero and PT Askes Persero have both ceased to exist.
The end of Jamsostek
The idea is for the Social Security Administrators Law to replace the Jamsostek Law, although it is not entirely clear when this will happen. Our initial view is that the Jamsostek Law will effectively be replaced by the Social Security Administrators Law (and will no longer prevail) as of 1 July 2015, by which date both the Manpower BPJS and Health BPJS will be fully functional.