Financing Social Protection And Social Security Asset Management in Indonesia

 I. Backgound

Currently, the social protection system in Indonesia is not organized according to one universal criterion. For each program and groups population, there is one regulation and one  special administration which is responsible to collect the contributions and benefits provision. The implementation of the regulation and supervision activities are conducted by the different ministries.

The form of social protection includes public intervention and private initiative. Currently social protection in Indonesia is based on two (2) types of public interventions, which are (i) contributory social insurance and mandatory savings (social security); and (ii) non-contributory provision of social support targeted to the poor and vulnerable groups of society (social assistance or bantuan sosial). While, the private insurance plays for individual old-ages provisions and individual health insurance.

The definition of National Social Security Sytem (SJSN) as stipulated under the Law 40/2004 , is a system to administering social security programmes by several social security administering bodies. Which further defines the social security as one of social protection that given to guarantee the entire people in order to be capable in fulfilling their appropriate basic need.

But, the fundamental purpose of social security in principle are to create the social welfare, that the condition in fulfilled of material needs, spiritual, social for all people, in order to capable to decent live and able to develop themselves to perform the social function, as expressed under Law 11/2009 on Social Welfare.

Therefore, the national social security system (SJSN) only regulated the administering of social security programmes by collected the funds that derived from contribution to providing protection against the potentially risk befall of participatn and their family members (social insurance), and the mandatory savings from and for the participant. While the social assistance, is the social support that intended specifically for the poor and vulnerable people.

In terms of financing, the social assistance programmes was allocated from central and local government budget, as the mandatory spending from central and local government budget. The budget was managed by several ministries, and implemented into the form of programmes intervention for income support and social services. Some example of income support program as cash transfer (Bantuan Langsung Tunai-BLT) in 2005, that reaching 19.2 million poor people, and continued with the conditional cash transfer program (Hope Family programmes – PKH) in 2007 untill now.

Meanwhile, view example of social service programs are like a Community Health Insurance (Jamkesmas) and Health of the Poor (Askeskin), School Aid programmes (BOS), Maternity  insurance for pregnant women (Jampersal) and social welfare insurance (Askesos), and those programmes were implemented under the different ministry, which is the Ministry of Health (MoH) and the ministry of Social Affairs (MoSA).

In addition, related to Social Security in the SJSN era, the government provides the contribution assistance specifically on behalf of distute and poor participants of the national social security programmes. Whereas, the other citizens especially a formal workers, the social security programmes was managed by the state owned enterprises (BUMN as a limited company (Persero), such as Indonesian Armed Forces Social Insurance (PT. ASABRI Persero); that runs the old-age benefit for armed forces, police personel and civil servant employed in Military and Police institutions; The Savings and Retirement Insurance (PT.TASPEN Persero), that runs old-age benefit only for civil servant; Manpower Social Security ( PT. JAMSOSTEK Persero); that runs old-age benefits , death benefits, healthcare and maternity benefits, and workplace accident benefits for private employees and also runs the voluntary schemes for employees in informal sector, particularly economy sector, and Health Insurance company ( PT. ASKES Persero) that runs healthcare and maternity benefit for civil servant, government pensioners, military and police pensioners then the veterans.

However, since the implementation of the Law 40/2004 on National Social Security System, the government also passed the Law 24/2011 on Social Security Agency (BPJS), which encourages transformation in the administering of social security institutions, from the state-owned enterprise (BUMN; such Jamsostek and Askes) to BPJS as a state-owned public legal entity (BHMN)

II. BPJS : Resources And Assets Management

Social Security Agency (BPJS) as stipulated in Law 24 of 2011, is a statutory body that aimed to realize the implementation of the provision of guarantee for the fulfilling of the appropriated  basic need of life for each participant and or his/her/family members, and responsible to managing the contibutions from the community as known as Dana Jaminan Sosial (DJS) or Social Security Fund (SSF), for the payment of benefits or avail of social security to the people who pays, as well as for financing the operational implementation of social security programs. On the other hand, for people who can not afford to pay dues will be supported by the government, which are categorized as a Beneficiaries of Insurance Premium Subsidies  or Penerima Bantuan Iuran (PBI).

In addition, BPJS also an institution or agency that manages social security assets, which are separated in the management of social security assets into two types of asset management, which is a BPJS Assets and Social Security Fund (SSF) asset. Although in the rules, does not explained the reasons why these assets shall be separated.

Asset management of social security by BPJS are different with asset management of social security by the Institution of Social Security in the pre-SJSN. In accordance with the rules of profit- oriented enterprises such as PT Askes (Persero) and PT Jamsostek (Persero) does not separate the asset management of social security funds from the institution/agency assets. Besides that, the law on BPJS is very clearly emphasized, that the Social Security Fund (SSF) asset shall not be an asset of BPJS as an institution/agency. This assertion is to ensure that the social security fund (SSF) is a trust fund belonging to all the participants and not an asset  of BPJS.

In organizing the social security, BPJS obtain operational funds to hold social security program, which comes from the accumulation of social security contributions, as well as the revenue of asset/funds expansion to finance the operations of implementation of the social security program. In other words, BPJS operational funds sourced from BPJS assets and SSF assets , to financing consist of personnel cost ( Salary or Wage and other additional benefit) and non- personnel cost. See Table-1.

16 Financing Social Protect INA_Rizki Estrada_INISIATIF 4

III. Case-1. Initial capital from Government to BPJS

The initial capital of the government comes from the budget financing expenditure as past  of the State Revenue and Budget Expenditure (APBN) to the Social Security Agency (SSA/BPJS), in the form of Others State Capital Investment (Penanaman Modal Negara-PMN), which is intended as an initial capital for the state-owned public legal entity (BHMN). In addition to state owned enterprises (BUMN) and for international financing agencies.

The others states capital investment (PMN) was allocated by the Government of Indonesia, as a source of funding that separated from the state budget, but as an financing component of non- debt and abroad, which is sourced from non-tax revenues (PNBP) or government revenue from natural resources, the government’s share in the profits of State-Owned Enterprises (BUMN), other non-tax revenues as well as revenues from the Public Service Agency (BLU).

The initial capital for the BPJS from the State Revenue and Expenditure Budget (APBN) in 2014 at least arounds IDR,- ( two trillion rupiah)/ USD 153.846.153,85; with proportion 56 percent to BPJS-Health (Kesehatan) and 44 persen to BPJS-Manpower (Ketenagakerjaan)[1].

Case-2. Revenue of transfer assets of the State- Owned Enterprises (BUMN) to Social  Security Agency (BPJS)

On January 1, 2014, all assets that managed by PT Askes (Persero) and PT Jamsostek (Persero) transferred to BPJS. The separation of asset management enacted to the  transfer  of assets to PT Jamsostek (Persero) and PT Askes (Persero). This separation in accordance with the provisions of the governance of social security funds by BPJS.

Assets of PT Askes (Persero) and PT Jamsostek (Persero) as the state-owned enterprise transferred as the assets of BPJS . The assets PT Askes (Persero) transferred as asset of BPJS for Health, and the asset from PT. Jamsostek transferred as the assest of BPJS for Manpower. On the other hand, the assets of health insurance program that rightfully by the participant under the PT ASKES were transferred to became the asset of the Social Security Fund (SSF)-Health. Similiarly, the asset of the health insurance program (JPK) under the PT.Jamsostek transferred to the Social Security Fund (SSF) for Manpower. In December 2014, the total equity that tranfereed from PT.ASKES to the BPJS-Health reached IDR 9.1 trilion rupiah, and total equity that transferred from PT.Jamsostek to BPJS-Manpower reached IDR 6.3 trillion rupiah[2].

Since the BPJS for Health in operation on January 1, 2014, means that (i) The Ministry of Health (MoH) no longer implement public health security program (Jamkesmas, Jampersal, Askeskin), (ii) Ministry of Defense (MoD), Armed Forces of Republic Indonesia (TNI) and National Police of Republic Indonesia (POLRI) no longer implement health service program for the participant, except for certain health service related to its operational activity of which is set with the Regulation of President; and (iii) PT. Jamsostek (persero) no longer implement health care security program.

As same as PT.Jamsostek (persero) that changes to be BPJS for Manpower on 1, 2014,  means that ; (i) PT.Jamsostek declared dissolved without liquidation; (ii) BPJS fo Manpower only held the working accident program (JKK), Old-ages Program (JHT) and death insurance later than July 1, 2015, and (iii) the assest transferred of PT. ASABRI dan PT. TASPEN to BPJS for Manpower will be implemented later than 2029.

IV. Cases-3. Depository Institution and Asset Expansion

Of which have been described above regarding the transfer of assets, further the BPJS were prohibited to cross-subsidize between programs with pays benefits from other programs funds, and the rest, BPJS obliged to keep the Social Security Fund (SSF) to the Custodian Bank who have a  legal entities as State Owned Enterprises

Based on the this study indicated that the custodian bank is meant is a financial institution that is responsible for storing and maintaining various asset of investments.The other findings are, from the four bank that are partly or wholly owned by the government of Indonesia, such as Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), Bank Tabungan Negara (BTN) and Mandiri Bank, there are only three banks that are designated as the custodian service providers which are, BNI, BRI and Mandiri. In other words, the bank in meant is a the bank that owns the facility costudian services such as management or mutual fund and securities includes the Mutual Fund, Limited Investment Mutual Fund, Pension Fund and the Collective Investment Contract Asset Backed Securities (KIK EBA).

In addition, a third of the state-owned bank costudian is the largest shareholder of the Indonesian Central Securities Depository (KSEI), as the Securities Depository and Settlemen Institution in the Indonesia capital market as one of the Self Regulatory Organization (SROs). Which mean that, the Social Security Fund (SSF) and the BPJS Asset were managed at custodion bank in the form of mutual fund, pension fund, insurance or other investement instrument, then expansioned at the capital market.

Next, related to asset expansion, that the BPJS have the authorities to put the  social security fund (SSF) for short and long-term investment, that aimed to developing or expansion the BPJS asset and the SSF assets. The social security fund (SSF) investmen provision required under the Government of Indonesia regulation number 87/2003 about the Health Asset Social Security (HASS) and number 99/2013 about Manpower Asset Social Security (MASS). The table-2 below describes the investment intruments and limitation referring to the rules that contained in those Government Regulation;

16 Financing Social Protect INA_Rizki Estrada_INISIATIF 7 As a case through this study, the BPJS for Manpower was recorded as a shareholder by 2 percen of the total shares owned by Bank BRI in 2016 that reached IDR 17 billion rupiah[3]. BPJS – Manpower recorded as the only one of domestic investor as the non-governmental category and is a shareholder of the only entities in Indonesia. The rest shareholder are 82 percent owned by Indonesia Government and 16 percent by foreign bussines entities.

Similar to the Mandiri Bank, with total stock in 2016 reached at IDR 23,5 billion rupiah[4], amounting to 60 percent owned by the Indonesia Government, and 30 percent by foreign bussines entities. From 10 percent of total shares from domestic investors, at least 2 percent was owned by BPJS Manpower in the form of old-ages security program (JHT) and working accidental inssurance (JKK).

The another asset expansion that invested by Social Security Agency, this study also founded that BPJS-Manpower also recorded as the shareholder from the largest mining company in Indonesia, that known as PT. Aneka Tambang (Antam). The total shares owned by non- governmental in 2016 reached at IDR 3.7 billion[5], amounting 3 (three) percent of shares owned by BPJS-Manpower on behalf of institutions and program comprises to insurance and pension funds. Beside that, amounting 6 (six) percent of shares are held by PT. ASABRI and PT. TASPEN on behalf of institution and program comprises to insurance and pension funds. And more stock also invested through to the one biggest company in general contractor in wide range od construction activities such as highway, bridges, ports, airport, building, cement plant and other industrial facilities, that known as PT. Waskita Karya. In 2015, the total shares owned by non-governmental reached at IDR 1,8 trillion rupiah[6], amounting 1,4 percent of stock was owned by BPJS-Manpower.

V. Key Points

Based on the described above, there are some key point that can be taken, as follows;

  • Financing of social protection in Indonesia sourced from State Revenue and Budget Expenditure (APBN), that differentiated by the central and local government,
  • Central government spendin on social protection in Indonesia in devided on subsidies and social assistance spending, which managed by different ministries in the form of program intervention, particularly to poverty alleviation,
  • Financing to Social Security Agency (BPJS) were sourced from State Capital Investment (PMN), which obtained mostly from Non-Tax Revenue (PNBP) comprises natural resources, profit transferred from State-owned enterprises and public service,
  • The transformation of Social Security institutions in Indonesia its not only changes from state-owned enterprises (BUMN) to the state-owned public legal entities (BHMN), but rather to tranferred the asset and liabilities,
  • Social Security agency (BPJS) in Indonesia has tha authority to manage the asset through investment to expansion the Social Security Fund (SSF), which does not clearly set that is for financing the operational funds, payment of social security benefit to the participant of to increase the economic growth as part of the sustainability financing.


[1] Sources: Central Government Financial Report of Republik Indonesia 2014

[2] Sources: Central Government Financial Report of Republik Indonesia 2014

[3] Source: Annual Report and financial statement of PT. Bank Rakyat Indonesia, 2016

[4] Source: Annual Report and Financial statement of PT. Mandiri. Tbk, 2016

[5] Sources: Ownership Structure of PT. Antam.Tbk. 2016,, downloaded on August 15,2016. 02.00 pm.

[6] Sources: Annualy Report & Financial Report 2015 of PT. Waskita Karya, 2016