Pension Funds in Indonesia can be separated into 2
categories:
1. DPPK (Dana Pension Pemberi Kerja) –EPF
(Employer Pension Fund)
2. DPLK (Dana Pension Lembaga Keuangan) –FIPF
(Financial Institution Pension Fund)
Type of pension plans:
1. Defined
Contribution Plan
Pension Fund
Employer Pension Fund (EPF) – DPPK
-
EPF is
a separate entity of the company.
- To set up an EPF, the company has to apply for legal license from
the Ministry of Finance.
- Type of
Plan: Defined Contribution or Defined Benefit
- Defined Contribution (DC) Plan:
The benefit is the
accumulation of the contribution plus interest at retirement age
- Defined Benefit (DB) Plan:
The benefit is
determined in a fixed amount at the attainment of retirement age. The formula
is as follows:
Factor
x Year of Service x Final Pension able Salary
- The retiree has to transfer the lump sum benefit to a monthly
income benefit by purchasing an annuity plan from a Life Insurance Company
Financial Institution Pension Fund
(FIPF) – DPLK
FIPF is a separate entity of the
Life Insurance Company or Bank.
- To set up a FIPF, the Life Insurance Company or Bank has to apply
for legal license from the Ministry of Finance.
- Type of
Plan: Defined Contribution
Defined Contribution
Plan:
The benefit is the
accumulation of the contribution plus interest at retirement age.
- The retiree has to transfer the lump sum benefit to a monthly
income benefit by purchasing an annuity plan from a Life Insurance Company.
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