Updated Requirements and Procedures on Old-Age Benefit Program

The Minister of Manpower (“MOM”) recently issued a new regulation governing the Old-Age Benefit (Jaminan Hari Tua or “JHT”) Program, i.e., MOM Regulation No. 2 of 2022 dated February 2, 2022 on Procedures and Requirements for the Payment of the Old-Age Benefit Program (“Regulation 2/2022”). Regulation 2/2022 will be effective from May 2, 2022 and revokes MOM Regulation No. 19 of 2015 dated August 19, 2015 (“Regulation 19/2015”) on the same matter.

The JHT Program is one of several social security programs under the Employment Social Security (the “BPJS Ketenagakerjaan”). The JHT Program will be given in a form of cash, when a JHT Participant reaches the retirement age, passes away, or suffers from permanent disability. In this regard, a JHT Participant is every employee, including a foreign worker who has worked for at least 6 (six) months in Indonesia and who already paid the premium.

In regard to the persons entitled to receive the JHT, there is no difference between Regulation 2/2022 and Regulation 19/2015: both regulations state that the JHT shall be paid out to Participants who (i) have reached the retirement age, (ii) are permanently handicapped or (iii) pass away. However, a key difference is that Regulation 2/2022 adds a caveat for Participants who resign or whose employment is terminated—such Participants must reach the age of 56 (fifty-six) before being eligible for the JHT payment. We elaborate on this and other key provisions of Regulation 2/2022 below.

  • JHT for Participants Reaching Retirement Age

The JHT will be paid out to Participants when they reach 56 (fifty-six) years of age, and/or have permanently stopped working due to:

  1. resignation;
  2. termination; or
  3. departing Indonesia permanently (applicable only for foreign workers).

As noted above, for Participants that stop working due to resignation or are laid off/terminated, they will only be eligible to receive the JHT benefits after reaching the age of 56 (fifty-six) years old. Previously, such conditions were not governed under Regulation 19/2015. Under Regulation 19/2015, Participants who resigned or whose employment was terminated would receive the JHT payment after a 1 (one) month waiting period.

  • Participants Who Suffer Permanent Handicap

Participants who suffer from permanent handicap are also eligible for the JHT benefits before reaching the retirement age. However, they are only entitled to JHT 1 month after the relevant Participant is declared permanently handicapped. To claim for these benefits, the relevant participant must submit their (i) BPJS Ketenagakerjaan Card, (ii) Certificate of the examiner and/or advisory doctor and (iii) KTP or other identity card.

  • Participants Who Pass Away

In cases where JHT Participants pass away, the benefits will be given to the heirs (the widow/widower, or children; if any). Otherwise, the benefits will be given to the Participant’s relatives in linear blood relation, siblings, in-laws, or other parties appointed under the participant’s testament.

The new requirement under MOM Reg. 2/2022, particularly the requirement to reach the age of 56 to enjoy JHT benefits for some Participant categories, seems to complicate access to benefits for workers, as they may have to potentially wait for years to receive JHT if they resign or are laid off. The regulation has also been met with considerable backlash from the public, calling for the revocation of MOM Reg. 2/2022. With pressure from the public, we anticipate that there will be some developments surrounding this regulation.

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February 15, 2022

Please contact Thomas P. Wijaya (twijaya@aksetlaw.com) or Danang W. Dwinanto (ddwinanto@aksetlaw.com) for further information.

 

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