What You Need to Know About Insurance in Indonesia

Transcription

1 Article published in the ANDA DAN HUKUM DALAM KESEHARIAN publication series Date of Publication: March 8, 2008 A BRIEF ABOUT RETIREMENT/PENSION FUND AND LIFE INSURANCE This document is a translated version of the Indonesian article: SEKILAS TENTANG DANA PENSION / JAMINAN HARI TUA DAN ASURANSI Having a secure old age is an essential part of everybody s plan in life. Those who are working as Indonesian government civil servants may be rest assured of their pension plans because they will undoubtedly receive a pension or old age payments, for which they contribute on a monthly basis by having their salary deducted automatically. Those who work for private companies also have their own pension or old age plan provided by insurance companies. They can also resort to schemes that provide security when they are no longer physically fit to work or carry out activities. Many of those who lost their lives in the tsunami left behind savings, and pension and insurance fund schemes. The heirs of such victims are automatically entitled to benefit from such fund and schemes. However, in many cases, surviving heirs do not really understand how to access their entitlements. On the other hand, there are certain situations where the surviving heirs think they are entitled to savings when actually they are not. The Head of the Consultative Council of Islamic Scholars (Majelis Permusyawaratan Ulama/MPU) of Aceh, Muslim Ibrahim, says that there are 3 levels of awareness among the community with regard to saving schemes that constitute part of familial inheritance: 1. People are aware of the schemes but do not fully understand them 2. People do not understand how the schemes work but demand to benefit from the them 3. Some people are completely ignorant about the schemes therefore they do not do anything about them

2 He further states that as part of the household property, pension savings and money as well as old age insurance (jaminan hari tua) and other such schemes are usually classified as joint matrimonial property, depending on the sources of funds. To give one example, before he was married, A has a saving of Rp. 100,000. This increases in amount after he gets married. This money minus the Rp. 100,000 is classified as joint matrimonial property, to which A s wife and children will inherit. This is explained more in-depth below. Pension Funds and Old Age Insurance Surviving heirs of deceased civil servants receive (among others payments) pension money and old age savings (superannuation) (Article 8 of the Government s Regulation (PP) No ), for which the civil servants contributed 8% of their monthly salary (Article 6 paragraph (1)). The provisions in the above Regulation classify pension money and pension savings as joint matrimonial property as they are acquired during marriage. However, unlike the common methods of distribution of joint matrimonial property, such monies will be distributed in cash once per month to one of 3 main heirs according to the following hierarchy: Widow/widower of the deceased civil servant until the widow/widower remarries or dies Children of the deceased civil servants until the children reach 23 years of age, are employed or marry. Father or mother of an unmarried deceased civil servant for a period of time to be specified by regulations (Article 41 paragraph (1) and (6) of the Law (UU No. 40/2004 and Article 10 (2) of the PP No. 25/1981) However, in the event that the heirs in the above hierarchy are not alive, monthly pension payments cannot be received by other relatives, such as siblings or uncles. In relation to this, the Vice Chairperson of the NAD Provincial Mahkamah Syar iyah

3 (Islamic Court), Jufri Ghalib, SH., M.Hum, says that should the problem be solved at the Mahkamah level, the judge will make decision in accordance with the above law. Apart from these monthly pension payments, the heirs of deceased civil servants are also entitled to old age savings (superannuation), which is paid in a lump sum. Article 37 paragraph (4) of the Law (UU) No. 40 year 2004 on the National Social Security System states that superannuation, or Taspen as it is more commonly known, can be distributed to the heirs outside of the above classification of three main heirs. Employees of private companies are only entitled to old age insurance. Such old age or insurance schemes can be paid in the form of a lump sum or in instalments to legal heirs, who could be the employee s widow/widower or children. Article 14 paragraph (2) of the Law No. 3 year 1992 on Pension Funds states that old age insurance is paid to the widow or widower or children of the deceased employee. The Law on National Social Security System No. 40/2004 regulates provisions on payments of pension monies and old age insurance (superannuation). Article 37 paragraph (4) of the Law stipulates that when an employee dies, superannuation and life insurance contributions will be paid to the legal heirs. The respective Article does not define who could fall into the category of legal heirs. Therefore, when the employee s spouse and children have also died, other heirs (such as siblings, parents, or cousins) are also entitled to receive the old age insurance - when the deceased was a private company s employee, or Taspen (pension savings/superannuation) when the deceased was a civil servant. Because these provisions were only introduced two months before the tsunami, many people affected by the tsunami may not be aware of how to solve problems regarding distribution of pension funds and pension savings to heirs. Jufri Ghalib recommends that problems concerning distribution of such inheritance are solved through a musyawarah (negotiation to reach agreement) by involving other parties who are deemed to have better judgement, such as the geuchik (village chief) or imam gampong. However, many such cases have also been handled by the Aceh

4 Provincial Mahkamah Syar iyah. During 2007, the NAD Provincial Mahkamah Syar iyah received 43 cases on joint matrimonial property and 125 cases on inheritance. Life Insurance: Joint Matrimonial Property or the Deceased s Property? Many of the people who died in the earthquake and tsunami in Aceh have contributed to private life insurance policies. When insurance companies have to pay compensation to heirs of the victims, question arise whether the compensation is part of harta bersama (joint matrimonial property) or harta peninggalan (inherited property from the deceased person). Jufri Ghalib explains that, referring to the cassation decision by the Supreme Court No. No. 97/AG/1994, life insurance payments cannot be classified as joint matrimonial property and are not part of the deceased s property because life insurance policy has its own provisions, where contributors to such policies decide who should benefit from the life insurance payment the contributor dies. In the same token, Muslim Ibrahim recommends that it is better to track down the origin of any property investment for pensions in order to make it easier to classify the property as harta bawaan (personal property), harta peninggalan (deceased property) or harta bersama (joint matrimonial property). In such a devastating disaster as the tsunami in Aceh, many of the victims left behind property to legal heirs who themselves cannot be identified. In such cases, says Muslim Ibrahim, the property must be transferred to the Baitul Mal (Islamic Treasury) to be inherited by all Muslims in Aceh. An example of such a case is where tsunami legal heirs are not aware that the benefactor has left behind savings or an insurance policy so that they never act on it. Ideally, the financial or insurance institutions should report the existence of the property to the Mahkamah Syar iyah, who will immediately identify the legal heirs. In the absence of legal heirs, the property should be transferred to the Baitul Mal, in line with Article 1 paragraph (6) of the Law No. 48/2007 on Legal Issues Concerning the Implementation of Rehabilitation and Reconstruction of Acehnese and Nias society. This states that the Baitul Mal is the Islamic Religious Institution in Aceh responsible for the guardianship, maintenance

5 and management of religious property for the benefit of Muslims and that the institution is to become the guardian of the property in line with Islamic law. Three years after the tsunami in Aceh, there has not yet been any decision issued by the Mahkamah Syar iyah regarding a financial institution s announcement concerning the property of tsunami victims left unclaimed due to its inability to identify legal heirs. One member of the board of management of the Baitul Mal of Aceh - Said Muhammad Husin, says that the Baitul Mal of Aceh has never received any property left by benefactors whose legal heirs are not clear or are not identified.