Types Of Pension Fund Program: Here's The Retail

Types Of Pension Fund Program (image @ KamanAyZee - Freepik)

YOGYAKARTA - Preparing pension funds for old age must be done as early as possible. You can start pursuing various types and benefits according to your needs. Thus, when retirement comes, you always have funds that can be used for various necessities of life.

According to the Big Indonesian Dictionary (KBBI), pension funds are funds obtained from regular contributions from each participant plus industrial income allowance, and participants have the right to get a share of the profit after retirement.

Meanwhile, sourced from Law No. 11 of 1992, pension funds are the legal body that manages and implements the program with the promise of pension benefits. It can be said that old age funds must be managed by a trusted and legitimate body.

When viewed from the 2 definitions above, it can be concluded that the funds for retirement are funds collected by certain institutions using worker contributions, then given back when the worker reaches retirement. In Indonesia itself, employees will enter a full term of service when they are 60 years old.

Why Do You Need Retirement Funds?

The importance of pension funds cannot be ignored, especially given the large financial position in a retired life. Some of the reasons why it is necessary to have adequate pension funds include:

Broadly speaking, the funds for the retirement period are divided into 2 types, namely sourced from the program and sourced from the organizers. Each has its own comparison and use according to the organizers.

Pension Funds Based On Program

Based on the program, the funds for retirement are divided into 2 types, namely the Retirement Fund for Pasti Benefits and the Contribution Pension Fund. Here's a description of the two.

Benefits Pension Funds Pasti

The Benefits Pension Fund Pasti (defined benefit plan) is a pension program whose benefits are obtained through the industry where you work. This fund comes from a cut in employee income when it is still working plus funds from the employer. The funds will be added by the company and carefully invested.

Contribution Pension Funds Pasti

The Contribution Pension Fund Pasti(defined contribution plan) is an investment program whose contributions were inaugurated at the beginning, after which all the contributions and the results of the development were recorded in the participant's account.

Pension Funds Sourced To Organizers

For the provisions stated in Law No. 11 of 1992, the pension period funds sourced from the organizers are divided into 2 types, namely the Employers' Pension Fund (DPPK) and the Financial Institution Pension Fund (DPLK). Here's the full information.

Employer Retirement Fund (DPPK)

The Employment Pension Fund (DPPK) is a fund built by people or agencies that employ employees, as founders, to organize a Retired Benefits Program Pasti or the Retired Contribution Program. Of course, for the benefit of some or all of its employees as participants, as well as those that raise obligations to employers.

Financial Institution Retirement Fund (DPLK)

The Pension Fund of Financial Institutions or DPLK is a fund built by banks or the life insurance industry to organize the Contribution Pension Program. Of course for individuals, both employees or independent workers who are separated from employers' pensions for bank employees or the life insurance industry concerned.

Pension Funds Sourced On Profits

The Pension Fund Sourced from Profits is the Employer Pension Fund (DPPK) which organizes the Retirement Contribution Program of Course (PPIP), with only contributions from employers based on formulas related to employers' profits.

Special for this full-time fund, the contribution is taken from the accumulation obtained from investment. The contribution funds are invested in assets in the capital market and real assets. For retirement funds that take the contribution program, of course, the investment is determined by the founder together with the supervisory board.

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