Impact of the New Old Age Security (JHT) Regulation
February 23, 2022
The Indonesian Government has recently introduced a new regulation concerning the provision of Old Age Security (Jaminan Hari Tua or “JHT”) for Indonesian workers. As defined in Article 1 paragraph (1) of the Minister of Manpower Regulation No. 19 of 2015, JHT refers to a lump sum cash benefit paid to participants upon reaching retirement age, in the event of death, or in the case of permanent total disability.
The JHT program is regulated under the Minister of Manpower Regulation No. 19 of 2015 concerning the Procedures and Requirements for the Payment of Old Age Security Benefits, which was later amended on February 4, 2022, by Minister of Manpower Regulation No. 2 of 2022.
This amendment introduces changes to the eligibility age for claiming JHT benefits. The adjustments aim to align the program with its original intent—ensuring that workers who reach retirement age continue to receive their entitled benefits. Accordingly, several provisions in the previous regulation were revised.
Previously, under Minister of Manpower Regulation No. 19 of 2015, participants eligible to claim JHT benefits and the required waiting period for disbursement were further regulated as follows:
VOLUNTARY RESIGNATION
Article 5 paragraph (1)
Benefits may be paid in a lump sum after a one-month waiting period, starting from the date stated in the official resignation letter issued by the company.
PARTICIPANTS AFFECTED BY TERMINATION OF EMPLOYMENT
Article 6 paragraph (1)
Benefits may be paid in a lump sum after a one-month waiting period, starting from the date of the employment termination letter.
PARTICIPANTS WHO PERMANENTLY LEAVE INDONESIA
Article 7
In the case of participants permanently leaving Indonesia as referred to in Article 3 paragraph (3) letter c, benefits may be paid in a lump sum upon fulfillment of the following requirements:
A signed statement declaring that the participant will no longer work in Indonesia;
A copy of the participant’s passport; and
A copy of the visa for Indonesian nationals
Meanwhile, Minister of Manpower Regulation of the Republic of Indonesia No. 2 of 2022, Article 2, further stipulates that JHT benefits shall be paid to workers/participants under the following conditions:
Upon reaching retirement age;
In the event of permanent total disability or;
In the event of death.
The Ministerial Regulation also amends provisions regarding the disbursement of JHT benefits for participants or workers, stating that:
“JHT benefits for participants who reach retirement age, as referred to in Article 2 point (a), shall be provided when the participant reaches the age of 56 (fifty-six) years.”
This provision revises the previous regulation concerning the waiting period or eligibility period for the disbursement of JHT benefits, which previously allowed workers to claim the benefits after a one-month waiting period and before reaching the age of 56.
The definition of “retirement age” as referred to in Article 2 is further elaborated in Article 4 paragraph (1) in conjunction with paragraph (2) of Minister of Manpower Regulation No. 2 of 2022. It stipulates that JHT benefits for participants who reach retirement age also apply to those who have ceased employment.
The term “participants who have ceased employment” is categorized into three groups:
Participants who voluntarily resign;
Participants who experience permanent total disability; or
Participants who pass away.
The enactment of Minister of Manpower Regulation No. 2 of 2022 has sparked both support and criticism. Ideally, in line with the meaning of Jaminan Hari Tua (Old Age Security), the benefit is intended to provide financial security during retirement. However, in practice, many workers who resign or are laid off often rely on these funds to support their livelihoods during transitional periods.
Therefore, a comprehensive review of this regulation is necessary to ensure that it remains fair, relevant, and responsive to the needs of the workforce.
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Authors :
1. Dwi Setya Ari Adiningrat
2. Tiffany Andi WIjaya
3. Sarah Caroline Arissanty
