Pensions at a Glance Asia/Pacific 2024

Normal pension age is 58 years in 2022 gradually rising to 65 by 2043, increasing by one year every three years. Retirement is not required and employees with 15 years of contributions receive a periodical pension benefit while those with less than 15 years get a lump-sum payment.

Earnings-related

The pension benefit accrues at 1%. Past earnings are valorised with prices. Contributions are paid up to a monthly ceiling of IDR 9.1 million. The minimum pension after 15 years of contribution is IDR 363 300 per month, with a maximum benefit of IDR 4.36 million per month. Pensions in payment are indexed to prices.

Defined contribution

The Jaminan Hari Tua (JHT) is a compulsory programme for all employees and retirees may opt for a partial lump-sum with a periodical payment until death or only a lump-sum. Employees contribute 2% of earnings and employers pay 3.7% of the payroll. The pension is paid as a lump sum or monthly up to a maximum of five years if the balance is more than IDR 3 million. For comparison with other countries, the pension is shown as a price‑indexed annuity based on sex-specific mortality rates.

Early retirement

It is possible to start claiming the pension at any age with a minimum of five years of contribution, if unemployed for at least 6 months.

Late retirement

The benefit may be deferred with no maximum age.

Childcare

There are no credits for periods out of the labour market.

Unemployment

There are no credits for periods out of the labour market.

Self-employed

Self-employed workers are covered by the same system as for employees covering both the employer and employer contributions. The base used for pensions is after the deduction of social security contributions.

Taxation of workers

There is a deduction of IDR 54 000 000 for a single individual. In addition, work-related expense is tax deductible, and the amount is 5% of earnings up to a ceiling of IDR 6 000 000. There is also a tax-deductible amount of 5% or up to IDR 2 400 000 for pension payments. Social security payments are tax deductible.

Taxation of worker’s income

The following table shows the tax rules applied to worker’s income:

Social security contributions payable by workers

Employees contribute 1% of payroll to the pension plans and 1% to healthcare.

Taxation of pensioners

There is no additional tax relief for pensioners.

Taxation of pension income

The following table shows the tax rules applied to pension income.

Social security contributions payable by pensioners

Pensioners do not pay any social security contributions.