There are 2 (two) types of pension program in Indonesia:
– Defined Benefit Pension Plan, and
– Defined Contribution Pension Plan
as regulated in Law No.11/1992 about Pension Funds
Defined Benefit Pension Plan:
monthly benefit promises is predetermined by a formula in the Pension Funds Regulation’s book. The contribution (especially for the employer) is not certain, depend on the actuarial calculation.
Defined Contribution Pension Plan:
monthly benefit is not certain, only the contribution is predetermined or definded. Actual monthly benefit will be calculated later based on the available accumulated funds.
Pension Funds in Indonesia:
Pension Fund established by the employer is called Employer Pension Funds (DPPK). It has option to choose which Plan to run but only one Pension Plan can be managed, either Defined Benefit or Defined Contribution.
Pension Fund established by the insurance company or bank is called Financial Institution Pension Funds (DPLK). It has option to run only Defined Contribution Pension Plan.related link : Directorate General Pension Funds ; Pension Funds Association of Indonesia ; Association of DPLK ; Pension Fund Profession Standards Institute