In Indonesia, employers are legally required to provide a comprehensive social security package for their employees. These benefits contribute to employee well-being and financial security.

Social Security Programs through BPJS

Indonesia's social security system is administered by Badan Penyelenggara Jaminan Sosial (BPJS), a government-run social security agency. Employers are required to register their employees with BPJS and contribute towards various programs:

• BPJS Kesehatan (Health Insurance): Provides health insurance coverage for employees and their dependents. Contributions are shared between employers (4%) and employees (1%) of the employee's monthly salary, with a maximum capped amount.
• BPJS Ketenagakerjaan (Employment Social Security): Offers several benefits including:
  • Jaminan Hari Tua (Old Age Security): Provides a pension benefit upon retirement. Employer and employee contribute a combined 8% of the employee's monthly salary (capped amount) towards this program.
  • Jaminan Kecelakaan Kerja (Work Accident Security): Covers medical expenses and income replacement in case of work-related accidents or illnesses. This program is solely funded by the employer with contributions ranging from 0.24% to 1.74% of the employee's salary depending on the industry and level of risk.
  • Jaminan Kematian (Death Security): Provides a lump sum payout to the employee's family in case of their death. This benefit is also funded solely by the employer with a fixed contribution rate.

Additional Mandatory Benefits

Beyond BPJS programs, Indonesian law mandates several other employee benefits:

• Paid Leave:
  • Annual Leave: Employees are entitled to a minimum of 12 days of paid annual leave after one year of continuous service.
  • Sick Leave: Employers must provide paid sick leave for a certain period, as outlined in the employment contract or by regulation.
  • Maternity Leave: Female employees are entitled to at least three months of paid maternity leave.
  • Paternity Leave: Male employees may be entitled to a short period of paid paternity leave, depending on company policy or regulation.
  • Menstrual Leave: Two days of paid menstrual leave per month are mandated for female employees.

In addition to mandatory benefits, Indonesian employers offer a range of optional benefits to attract and retain top talent. These benefits can significantly enhance the overall compensation package and create a more positive work environment.

Financial Benefits

• Housing Allowance: With rising housing costs, many employers offer a housing allowance to help employees afford rent or mortgage payments.
• Transportation Allowance: To ease commuting burdens, employers may provide a transportation allowance to cover fuel costs, public transportation fares, or even a company shuttle service.
• Meal Allowance/Subsidy: Companies might offer meal allowances or provide subsidized meals on-site to reduce employee lunch expenses.
• Employee Loans: Some employers offer low-interest employee loans for various purposes, such as homeownership, education, or medical emergencies.

Wellness and Lifestyle Benefits

• Education Assistance: Companies may offer financial assistance for employees pursuing further education, promoting professional development and loyalty.
• Wellness Programs: Investing in employee well-being, companies might offer wellness programs that include gym memberships, yoga classes, or health screenings.
• Flexible Work Arrangements: To enhance work-life balance, employers may offer flexible work schedules, remote work options, or compressed workweeks.

Other Benefits

• Private Health Insurance: While basic health insurance is mandatory, some companies offer supplemental private health insurance for broader medical coverage.
• Life Insurance: Providing life insurance coverage demonstrates employer care and offers financial security to employees' families.

Indonesia has a mandatory social security program that includes health insurance for employees. This program is known as BPJS Kesehatan (Badan Penyelenggara Jaminan Sosial Kesehatan).

Who is covered?

All Indonesian employees, including civil servants, who have worked for an employer for more than three months are entitled to health insurance. Since November 2022, even short-term foreign workers with work permits between 2-6 months must have health insurance, which the employer is responsible for obtaining.

Cost Sharing

Contributions to the health insurance program are split between the employer and the employee. The employee contributes 1% of their monthly salary, while the employer contributes 4% of the employee's monthly salary. Both contributions are capped at a specific amount. There are separate contribution rates for civil servants.

Coverage

BPJS Kesehatan covers the employee, their spouse, and up to three dependent children up to 21 years old.

In Indonesia, employees' retirement security is ensured through a combination of a mandatory social security program and a defined contribution plan.

Employment Social Security Agency (BPJS Ketenagakerjaan)

Indonesian employees are covered under the BPJS Ketenagakerjaan. This agency offers several programs, one of which is the Jaminan Hari Tua (JHT). JHT is a defined contribution plan where both employers and employees contribute a portion of the employee's salary. Employees contribute 2% of their earnings, while employers contribute 3.7% of the payroll. Upon reaching retirement age (gradually increasing to 65 by 2043) or meeting certain criteria, employees can choose to receive their JHT savings as a lump sum or opt for a partial lump sum with monthly payouts for up to five years.

Additional Retirement Planning Options

While JHT provides a foundation for retirement savings, it may not be sufficient to fully support an individual's post-retirement lifestyle. Here are some additional options for retirement planning in Indonesia:

• Private Pension Plans: Some employers may offer voluntary private pension plans to their employees. These plans can provide additional benefits on top of the JHT contributions.
• Personal Investment: Individuals can invest their savings in various instruments like stocks, mutual funds, or property to build their retirement nest egg.
• Employee Termination Allowance: Upon reaching retirement age or under specific circumstances, some employees may be entitled to a termination allowance from their employer. The amount typically depends on their salary and tenure with the company.