The Law of P2SK’s derivative regulations

The Government has passed Law No. 4 of 2023 for the Development and Strengthening of the Financial Sector (P2SK Law), which revises several articles in Law No. 40 of 2004 concerning the National Social Security System (SJSN), specifically as regards Old Age Security (JHT) and Pension Security (JP) programs.

Article 188 of the P2SK Law divides JHT funds into two accounts: the Main Account (AU) and the Additional Account (AT), with a larger portion in the AU. Funds in the AU can only be withdrawn when the worker retires, suffers from a total disability that prevents them from working, or dies. In emergency situations, JHT participants may withdraw some or all of the benefits from the AT.

There are three Government Regulations (PP) mandated in Article 188 of the P2SK Law: a PP on the proportion of contributions allocated to AU and AT, another on the benefits of old age security and the development of JHT funds, and a third on the amount of JHT contributions.

Issues involving the JHT Program are significant among Trade Unions/Labor Unions (SP/SB) and workers, given the controversy over the issuance of Minister of Manpower Regulation (Permenaker) No. 2 of 2022, which is now a national issue. Ultimately, the President ordered that Permenaker No. 2 of 2022 be altered to Permenaker No. 4 of 2022, which would allow JHT funds to be withdrawn when layoffs take place.

Article 189 of the P2SK Law also regulates the JP Program, which mandates the Government to establish a mandatory pension program, despite the existence of JP and JHT programs managed by BPJS Ketenagakerjaan, and pension funds managed by Financial Institution Pension Funds (DPLK) and Employer Pension Funds (DPPK).

Trade unions and labor unions (SP and SB) have a chance to improve the quality of the JHT program through these three regulations. It is important to urge the Government to include SP/SB during the discussions about these three regulations. Before analyzing these regulations, it is critical to formulate the main points and article-by-article proposals from SP/SB.


Article 188 in the P2SK Law, which regulates both accounts, AU and AT, serves as a middle ground for the controversy surrounding Ministerial Regulation No. 2 of 2022 and Ministerial Regulation No. 4 of 2022. Based on Legal Considerations of Constitutional Court Decision No. 033/PUU/2022 in point 3.10.2, I propose the Main Account and the Additional Account to be 65 percent to 35 percent, as the composition can help support workers’ savings for retirement, avoiding poverty.

Statistics Indonesia (BPS) in 2022 reported that the elderly poverty rate is increasing, posing a future problem. The poverty experienced by workers approaching retirement age results in a “sandwich generation,” which leads to systemic poverty.

For Additional Service Benefits (MLT), the JHT program only offers the Housing MLT, which allows workers the opportunity to own a home. However, it is important for future derivative regulations of the P2SK Law to include other types of Additional Service Benefits beyond housing MLT, such as food and transportation MLT.

The JHT returns should help workers meet their basic necessities during their employment, particularly those earning the minimum wage. Regarding JHT returns, the regulations stipulate that minimum development returns be equal to the interest rates on government bank deposits. In the future, I propose that JHT returns be provided proportionally, which means that the higher the wage and/or JHT balance, the lower the JHT returns will be in comparison to those of workers with a minimum wage. However, all workers will continue to receive a minimum return equal to the interest rates on government bank deposits.

The new MLT with more proportional returns will reconstruct the JHT Program as a program that up- holds the principle of mutual cooperation, as mandated by Law No. 40 of 2004 on SJSN (SJSN Law).

To support workers’ savings, the P2SK Law’s derivative regulations are expected to stipulate wages, as the basis for contribution payments, defined as basic salary plus fixed allowances, in addition to non-fixed allowances.

This could also create JHT contribution payments from non-wage income, such as bonuses, holiday allowances (THR), service fees, etc. Workers are given the option to increase their contribution percentage, paid from their wages, which can be controlled within Company Regulations or Collective Labor Agreements (PKB) with a value greater than 5.7 percent, including the top-up.

The Ministry of Finance proposes a Mandatory Pension Fund Program by setting an upper wage limit for JHT contributions, as mandated in Article 189, paragraph (4). This means that BPJS Ketenagakerjaan manages the 5.7 percent contribution up to a certain wage limit, but the 5.7 percent contribution from wages above that limit is transferred to the Employer

Pension Fund (DPPK) or Financial Institution Pension Fund (DPLK), an extremely inappropriate concept that will be rejected by trade unions (SP/SB) and workers.

The reason for this rejection is the provision in Article 58 of Government Regulation No. 35 of 2021, which compares severance pay compensation with pension funds. If workers are enrolled in the pension program, then severance pay compensation will be calculated with the existing pension funds. This means that if JHT contributions are handed over to DPPK/DPLK, workers’ money will be included in the severance pay they receive, which will disadvantage the workers.

Another reason for rejection is that many DPPKs/DPLKs have issues that may result in worker funds’ loss or cause problems in the DPPKs/ DPLKs—the commercial insurance entities that do not adhere to SJSN’s nine principles, whereas the JHT and JP programs do.

As a result, I recommend that the Pension Fund program be kept separate from the JP and JHT programs. If the Government wishes to set up a mandatory pension fund program, it should only apply to DPPKs/DPLKs, which will be compensated for their severance. Thus, BPJS Ketenagakerjaan should continue to handle JHT and JP without imposing a wage limit on the JHT program.

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