JHT vs Pension Security: 4 Key Differences in Indonesia

Many people assume that Jaminan Hari Tua (Old-Age Security), or JHT, is the same thing as pension security (Jaminan Pensiun). It is not. Since both programs were introduced, workers and non-workers alike have been able to breathe easier. To receive pension security, though, a worker must first enroll in the insurance. Once you are no longer productive, your finances are not what they were when you were working, and many people are left worried about how they will live in old age.

If you work for a large company, it will usually enroll you in the government's JHT or pension security program automatically. What if you work for a small company? If your employer is small and still developing, the chances of getting JHT or pension security through work are very slim. In that case you have to prepare your own pension security, by joining a pension security insurance plan. Before you sign up, take a look at these differences between JHT and pension security:

Payment of Funds

The difference between JHT and pension security starts with how the money is paid out. When you retire with JHT, you receive your funds in one lump sum. The money comes from the premiums you paid every month. So if your JHT comes to Rp50 million, the full Rp50 million is paid at once after you enter retirement. With pension security insurance, on the other hand, you receive money every month. The amount is based on a formula calculated by the insurer. The factors that determine how large or small the payout is include the monthly premium you pay, the length of the contribution period, the defined benefit and others.

Contribution Rates

The contribution rates for JHT and pension security also differ. The JHT contribution is 5.7%, while the pension security contribution is 3%. Of the JHT contribution, 2% goes to the worker and the remainder goes to the employer. For pension security, 2% goes to the employer and the remaining 1% goes to the worker.

Withdrawing Funds

The rules for withdrawing funds differ as well. With JHT, a partial withdrawal is allowed once the member has paid contributions for at least 10 years. With pension security, a partial withdrawal is only possible after the member has been enrolled for 15 years.

Pension Security Can Benefit a Spouse and Children

Another difference is that if the policyholder dies, pension security can continue to benefit their children and wife, as long as the wife has not remarried. The money is paid monthly, on the condition that the policyholder has paid contributions for at least 15 years.

If you want to become a pension security member, you can join the pension security insurance offered by Panin Dai-ichi Life. With Panin Dai-Ichi Life, you can look forward to a comfortable and happy retirement without having to worry about your finances. Pension security is more useful in old age because the money is paid monthly, so your retirement funds do not run out quickly. Those are the differences between JHT and pension security that are important to know. We hope this information is useful to you.