Implementation of the SJSN Law

 Implementation of the SJSN Law


The SJSN Law provides only a framework of the ultimate national social security system
in Indonesia

(That is why this law is called an “umbrella law”).

It does not mention the
transition measures from the existing segmented schemes to the ultimate system.

A number of substantial issues still remain to be worked out in the future. There is a vital
need to address the following issues:

(a) There needs to be a mid-term implementation plan (Road map) defining the
process of implementing the SJSN Law in stages. The Road map should clarify
the organisational structure of the SJSN and its impact on the existing social
security schemes. In line with the road map, strategic action plans should be
developed that describe the goals to be achieved for each stage of
implementation. It is critical that the road map and action plans should be based
on high degree of consensus and commitment at all levels of administration. The
National Social Security Council should monitor and evaluate the implementation
of the SJSN Act in line with the road map and action plans.

(b) Detailed provisions of the social security programmes need to be determined in
the Presidential Regulations. This will involve the development of policy options
for the benefit design (including the determination of the benefit parameters,
and the adjustment of the possible duplication of old-age benefits and pensions
benefits), determination of the contribution rates based on actuarial projections,
financing mechanism (including the determination of the adequate reserve level
and investment guidelines), and organisational arrangements.

(c) The administrative capacity for the existing social security organisations should
be strengthened to improve the compliance of the workers in the formal
employment sector and to prepare for the expansion of the workers in the
informal economy.

Posted in: SJSN