ILLUSTRATION. Illustration for pension funds in old age. KONTAN/Muradi/2015/1006. The Financial Services Authority (OJK) will implement a new policy regarding pension funds
Reporter: Nadya Zahira | Editor: Tri Sulistiowati
KONTAN.CO.ID – JAKARTA. The Financial Services Authority (OJK) will implement a new policy regarding pension funds, where starting October 2024, pension funds cannot be disbursed before participants reach a minimum membership age of 10 years.
Chief Executive of the OJK Insurance, Guarantee and Pension Fund Supervision (PPDP), Ogi Prastomiyono, explained that participants are required to choose a life insurance company to purchase Annuity Products, if 80% of the Participant’s Pension Benefit balance is more than IDR 500 million after taking into account PPh 21.
This annuity product, continued Ogi, is a life insurance product that provides monthly payments to participants who have reached retirement age, as well as to widows/widowers or children, for a certain period of time or periodically.
This annuity product will become the main source of income for pension fund recipients in the future.
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Ogi also stated that PPIP participants who retire must transfer 80% of their benefit balance to the annuity program. However, if earnings fall below the specified growth, the funds can be withdrawn in cash.
He emphasized that starting in October, disbursement or surrender Annuities may not be made before the participant reaches 10 years of age.
Furthermore, Ogi revealed that disbursement of annuities which is often done before time is one of the reasons why the Employer Pension Fund (DPPK) has not increased. This is because 80% of existing funds must be used to purchase annuity products.
“This is what makes the statistics on pension funds from the DPPK never increase, because once the funds come in, they leave the Defined Contribution Pension Program (PPIP) into an annuity, and are disbursed in less than a month. Even if it hits penalty which is quite large,” he said.
Ogi also considers that this practice is not in line with the main objectives of the pension program. According to him, if pension funds are disbursed too quickly through an annuity product that can be disbursed gradually, this will reduce the benefits of the pension program itself.
“Pension funds should provide benefits after retirement, not take them beforehand. If taken early, it just becomes a regular savings account, not a retirement plan. “This needs to be explained well to participants,” stressed Ogi.
To ensure that the objectives and benefits of the pension program are achieved, OJK will implement a rule that pension funds cannot be disbursed before the participant’s age reaches 10 years.
Also Read: Experience Quality Time with Your Children at KidZania with a 30% Discount from BRI
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Reporter: Nadya Zahira
Editor: Tri Sulistiowati
Pension Fun-damentals: The New Policy You Didn’t See Coming!
By the casual observer, pension funds might seem as exciting as watching paint dry—if the paint came in a beige no. 5. However, hold on to your hats, folks! It appears the Financial Services Authority of Indonesia (OJK) has decided to sprinkle a little spice into the pension pot with a new policy starting October 2024. Yes, that’s right. You won’t be able to lay your hands on that sweet cash until you’ve reached a membership age of ten years. Ten years! They really think we’re all planning a pension retirement party after a decade of hard work, like it’s some sort of 10-year high school reunion.
Reporting from Jakarta, our main character here, Chief Executive of the OJK Insurance, Guarantee, and Pension Fund Supervision (PPDP), Ogi Prastomiyono, has some sizeable announcements to dish out. You see, if you’re lucky enough to have a pension benefit balance exceeding IDR 500 million (that’s about enough money to buy a small island or fund a side project in underwater basket weaving), you’re going to have to select a life insurance company to purchase Annuity Products. Sounds fancy, doesn’t it?
What Even Is an Annuity?
Now, Ogi explains that an annuity product is like the retirement money vending machine—providing you with monthly payments post-retirement, along with some added benefits for your widows, widowers, or bustling brood of children. But let’s be clear—if you’re thinking of raiding that fund before you’ve done your ten years, you might as well forget it. “No soup for you!” as the famous soup Nazi would say.
And if you’re wondering what all of this means for your cash flow, listen closely. Ogi eloquently made it clear that nearly 80% of your hard-earned benefit balance must be transferred to this annuity program upon retiring. But fear not! If the cash flow doesn’t play nice and earnings dive south, that can be withdrawn in cash. So, hold on to your hats—this is a roller coaster of emotions!
Why Hasn’t This Worked before?
So, why is this introduction necessary? Apparently, disbursing pensions faster than a child can unwrap a chocolate bar has been one reason why the Employer Pension Fund (DPPK) hasn’t seen much of a rising tide. Ogi pointed out that once the funds trickle in, they tend to flow right back out into the annuity world quicker than you can say “retirement party”. Talk about a revolving door!
But let’s get deeper into Ogi’s philosophy here: a pension fund’s primary role is not merely to exist as a whimsical savings account you can raid at whim. This is about future security, people! He firmly believes the cash should be waiting to embrace you—like Aunt Mabel at a family reunion—after those years of hard graft. “Surrendering early reduces the benefits!” he proclaims as if holding a Michael Scott-style seminar. It’s not selfish, it’s strategical.
What Does This Mean for You?
As we gear up for October 2024, be prepared to rethink your approach to handling that pension fund. It’s no longer “available upon request” whenever you fancy it. Now, it’s time to clarify the fine print—because let’s face it, nobody reads the manual except for maybe that one friend who gets overly excited about IKEA furniture assembly.
To sum it all up, OJK’s new policy might just shove a little sense back into the pension fund game. Just remember folks—> Pensions are not just future dollar signs, they’re expectations, dreams, and possibly future family escapades (or misadventures!). So gear up and start planning properly; after all, the fun of pensions isn’t in the instant gratification, it’s in the anticipation.
If you want to keep tabs on the latest updates and find out how not to spend your hard-earned retirement resources like a contestant on a shopping spree, check the latest at Google News.
