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Social Security in Indonesia

SYSTEM AND ORGANIZATION

SYSTEM AND ORGANIZATION

Currently, the Indonesian system of social protection is not organized according to one universal criterion. For each program and group of population, there is one regulation and one special administration which are responsible for the collection of contribution and provision of benefits. The implementation of legislation and supervisory activities are assumed by different Ministries.

The form of social protection includes public intervention and privates initiatives. The current  form of publicly provided social protection is based on two kinds of public intervention, namely (a) contributory social insurance and mandatory saving (social security), and (b) non-contributory provision of social support to targeted poor and vulnerable group of society (social assistance). Private insurance plays for private old age provisions and private health insurance.

Social Assistance

Indonesian social assistance involves two programs namely income support and social service. The current program does not involve family benefits, the third type of social assistance. In 2005, the new elected government extensively widened the scope of social assistance through ‘Oil Subsidy Reduction Program’ (Program Kompensasi Pengurangan Subsidi Bahan Bakar Minyak-PKPS BBM).

Many local governments jointly subsidize social assistance programs in addition to the national social assistance program for local residents. Most of them extend the coverage of healthcare for the poor program (Askeskin/Jamkesmas) and school program to the near poor. In some provinces or districts, the local governments extend healthcare program to the entire local residents including the non-poor household.

The following programs of income supports in Indonesia:

  1. Social Welfare Program (Bantuan Kesejahteraan Sosial Permanen), the oldest program among social assistance programs in Indonesia, provides income support to neglected elderly, neglected children and poor disabled persons. A temporaryscheme is targeted at the victim of natural disasters/social disasters and troubled migrant workers. The schemeis implemented by the Ministry of Social Affairs and Local Governments.
  2. Cash Transfer (Bantuan Langsung Tunaihas been introduced in 2005. The unconditional cash transfer (bantuan langsung tunai tidak bersyarat) was implemented from October 2005 to December 2006 providing 19.2 million poor with income support. The unconditional cash transfer has been replaced by conditional cash transfer (bantuan langsung tunai bersyarat) since January 2007. In contrast to unconditional cash transfer, the conditional cash transfer provides income support to very poor family conditionally upon investment in human capital – school attendance, healthcare, nutrition). The target groups of conditional cash transfer program are very poor households with children between 0 and 15 years and/or a pregnant mother at the time of registration. Each family will receive funds for up to six years. During three years of implementation, in 2010 the conditional cash transfer namely Program Keluarga Harapan, was implemented in 20 provinces, 86 districts and 739 sub districts for 816.000 very poor households. The program is targeted to reach 2.4 million poor households in 2014.

The following programs of social services in Indonesia:

  1. Healthcare for the Poor (Jaminan Kesehatan Masyarakat Miskin / Askeskin - Jaminan Kesehatan Masyarakat / Jamkesmas) has been implemented since January 2005 for 74,6 million the poor and the near poor to cover free-of-charge primary healthcare services including maternity at public health center (PUSKESMAS) and inpatient treatment in third-class hospital wards. The Ministry of Health assigned PT ASKES to run this scheme until 2007. The Ministry of Health has been taking over the implementation since 2008 to directly distribute the funds to Puskesmas and hospitals.
  2. A maternity Benefit for the Uninsured Persons (Jaminan Persalinan) hasbeen implemented since 2011 for pregnant women who are not covered by any maternity scheme.
  3. School Aid Programs provide operational aid to primary and secondary schools (Bantuan Operasional Sekolah-BOS) and scholarships for senior secondary school students (Bantuan Khusus Murid-BKM). The programs have been implemented since 2005.
  4. Social Welfare Insurance Program (Asuransi Kesejahteran Sosial - ASKESOS) has been implemented since 2003 by the Ministry of Social Affairs for the poor and near poor working in informal sector of economy.  The Program covers limited healthcare benefits and death benefits for maximum 3 years of membership.

Social Security

The contributory social insurance and mandatory saving cover civil servants, armed forces personnel, police personnel and formal sector employees. The social security benefits consist of healthcare and maternity, old-age benefits, death benefits and workplace accident benefits.

The following institutions run social security schemes:

  1. PT Persero Asuransi Sosial Angkatan Bersenjata Indonesia (PT ASABRI Persero) is a State-owned enterprise or Persero that runs old-age benefits (saving scheme and pension) for armed forces, police personnel and civil servants employed in Military and Police Offices.
  2. PT Persero Tabungan dan Asuransi Pensiun (PT TASPEN Persero) is a State-owned enterprise or Persero that runs old-age benefits (saving scheme and pension) for civil servants.
  3. PT Persero Jaminan Sosial Tenaga Kerja (PT JAMSOSTEK Persero) is a State-owned enterprise or Persero that runs old-age benefits (provident funds), death benefits, healthcare and maternity benefits, and workplace accident benefits for private employees. PT JAMSOSTEK also runs voluntary schemes for employees in informal sector economy.
  4. PT Persero Asuransi Kesehatan Indonesia (PT ASKES Persero) is a State-owned enterprise or Persero that runs healthcare and maternity benefits for civil servants, government pensioners, military and police pensioners, and veterans.

Private Insurance

Private Insurance comprises of pension funds and health insurance program.

By the end of 2009, the number of operating pension funds were 279 plans, consisting of 251 employer’s pension funds-FIPFs (Dana Pension Pemberi Kerja-DPPK) and 25 Financial Institution Pension Funds-EPFs (Dana Pension Lembaga Keuangan-DPLK). Of the total plans, there were 2.67 million registered as participants in the plans, both as active participants and passive participants (retirees, widows/widowers, children, deferred pensioners).

FIPFs is a pension fund established by any individual or entity having employees, as it founder, to implement a defined benefit pension program or a defined contribution pension program, for the interests of all or part of such founder’s employees, as participants, and creating obligations on the employer’s part. EPFs is a pension fund established by a bank or a life insurance company to implement a defined contribution pension program for individuals, either employees or self employed.

Government’s roles

The role of the Government of Indonesia in social protection comprises wide spectrum, from regulatory and supervision to programs implementation. Their roles are determined by different legislations and regulations. 

The following roles of the Government of Indonesia in the area social protection:

  1. The People’s Representative Council (Dewan Pertimbangan Rakyat) has three main functions, legislative, budgeting and oversight. It promulgates bills as well discussing and approving government regulations in lieu of law and proposals from the Regional Representatives Council (DPD) related to regional issues. Together with the president, it produces the annual budget, taking into consideration the views of the DPD. It also has the right to question the president and other government officials.
  2. The Coordinating Ministry for People Welfare (Kementerian Koordinator Kesejahteraan Sosial) is responsible for coordination efforts for legislation and regulatory development, and the implementation of social protection programs.  This Ministry is responsible also for establishing a national secretariat of the National Social Security Council.
  3. The Ministry of State-Owned Enterprises (Kementerian Negara Badan Usaha Milik Negaraoversees the Perseros – PT ASABRI, PT ASKES, PT JAMSOSTEK, PT TASPEN.
  4. The Ministry of Finance (Kementerian Keuangan)supervises social assistance funds, social security funds, private insurance companies and private pension schemes.
  5. The Ministry of Labor and Transmigration (Kementerian Tenaga Kerja dan Transmigrasiis responsible for labor legislation and supervises Jamsostek schemes.
  6. The Ministry of Health (Kementerian Kesehatansupervises health insurance schemes and provides healthcare for the poor households.
  7. The Ministry of Social Affairs (Kementerian Sosial) provides social assitance programs both income supports and social services.
  8. The Ministry of Defense (Kementerian Pertahanan)supervises Asabri schemes and provides healthcare for armed forces personnel.
  9. The Ministry for Planning and Development/The National Board for Planning and Development (Kementerian Negara Perencanaan Pembangunan/Bappenas) is responsible for strategic planning and development.
  10. The Ministry of Interior Affair (Kementerian Dalam Negeri) oversees the implementation of decentralization policy, local autonomy and local governments.
  11. The Audit Board (Badan Pemeriksa Keuangan) audits and monitors financial management and accountability of State financing.
  12. The National Social Security Council (Dewan Jaminan Sosial Nasional) is responsible for social security policy development and harmonization of the implementation of social security schemes, and monitors the social security funds.
  13. The National Team for Accelerating Poverty Reduction (Tim Nasional Percepatan Penanggulangan Kemiskinan) is an adhoc team at the Vice President Office led by Vice President and is responsible to President. It was established in 2009.  The main tasks are to develop regulation and program for poverty reduction, to develop synergy through sinkronizing, harmonization and integration of poverty reduction innitiatives run by ministries and it is responsible for oversight the program.
  14. The President Advisory Council (Dewan Pertimbangan Presiden) provides advisory services to President individually as individual advices or collectively as board advice.

 

Download the Organization of Social Protection
Republic of Indonesia


© MARTABAT, AEP - Mei 2011

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