Salaries Cut Again For Pension Funds, DPR: For Daily Needs It Even Reduces

Photo by Edward Lawrence on Unsplash

JAKARTA - Member of Commission IX of the Indonesian House of Representatives, Netty Prasetiyani Aher, criticized the Government's plan to add a pay cut post for mandatory additional pension programs. The government does not know that employees have covered many other mandatory deductions.

"Currently, the salaries of private employees have been cut to pay Old Age Security and BPJS Employment Pension Guarantee, for civil servants, Taspen and TNI/Polri have been cut by Asabri. That alone is quite heavy," said Netty Prasetiyani Aher, Tuesday, September 10.

"If other pension funds are added, this will stifle the economy of low-income people," he continued.

The plan to cut employee salaries for this mandatory additional pension program began with a statement by the Financial Services Authority (OJK) which claimed that the candidate for the regulation was a mandate from Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector or P2SK.

The rules in question are Article 189 paragraph 4 of the P2SK Law which states that the Government can implement additional mandatory pension programs outside the old age security program (JHT) and existing pension guarantees through BPJS Ketenagakerjaan, Taspen, and other national social security systems.

OJK said the new mandatory pension program could increase the benefits of pension money because so far retirees have only received about 10-15 percent pension benefits from their last salary while the standard from the International Labor Organization (ILO) is much higher, reaching 40 percent.

Although ILO regulates the ideal pension benefits to be received by 40 percent, according to Netty, the Government must also consider the economic conditions of each country that are different. He said the ILO standard could not necessarily make additional salary for employee pension funds.

"The government must also consider the context of wages in Indonesia whose increase is not directly proportional to the increase in living needs," explained Netty.

"Don't let it be because you prioritize pension funds that are enjoyed in old age but the funds for daily needs are even reduced. This condition will reduce people's purchasing power," added the legislator from the West Java VIII electoral district.

The employee salary discount program for additional pension funds is said to be still under brewing through the issuance of Government Regulations (PP). Later, the OJK will act as a supervisor in harmonizing the entire pension program.

Commission IX of the House of Representatives in charge of employment affairs reminded the Government not to rush into implementing the rules. The government is also asked to straighten out the intention in every policy making related to transparent collection of funds from the public.

"Make sure the policy goes from the idea of providing welfare to the people, not the other way around," said Netty.

"Don't let the idea of collecting public funds for the sake of urging the government, for example to pay the mature state debt," he continued.

Netty also highlighted that there are still many fraudulent practices in the management of pension funds so that people do not really receive full pension funds from the total salary discount while they work. For this reason, he considered that the Government should focus on improving the management of existing pension funds rather than creating new programs.

"For example, taking firm action against malicious practices in pension fund management institutions that are widely complained by the public. Such as the issue of not disbursing one hundred percent or not in accordance with the pension fund regulations," said Netty.

According to Netty, corruption cases at pension fund management institutions such as Taspen are proof that there are still many problems that must be addressed in the management of pension funds.

"The existing program has not been managed properly, how do you want to add a new program. Don't let it become a corruption event again," he concluded.