Summary

Indonesia does not have a comprehensive social security system. Rather, it has two programs which cover retirement benefits, accident protection, healthcare and unemployment insurance. It is aimed primarily at providing protection for the lowest earners in Indonesian society.

Details

Contributions

The overall rate of contributions is approximately 11% for employers and 4% for employees. Income caps apply at a low level (approx. $708 per month) to health and pension contributions. The pension element of contributions (2% employer, 1% employee) is not mandatory for expatriates, and is capped at a slightly lower income level.

Treaties

Indonesia has a limited range of social security agreement, primarily with other ASEAN nations. Practically, inbound expatriates and their employees will not be protected from having to pay Indonesian contributions by virtue of these agreements, which may lead to a double contribution, particularly for those assignees from the US and the UK. However, due to the very low rate of Indonesian contributions, this is not a significant cost to business.

Exemptions

Given the comparatively low rate of contributions, the expatriate exemption from pension contributions, and the income cap, there is little incentive to seek exemptions from Indonesian social security.

Administration

Monthly payroll withholding of social security contributions is operated by Indonesian businesses; In addition to this, there is quarterly and annual reporting. Indonesian businesses are required to pay a 13^th monthly salary to all employees

Benefits

While expatriate contributions to the core elements of the social security scheme do in principle generate benefit rights, many benefits are means tested and therefore not payable to more highly paid individuals, and in practice foreigners rarely make benefits claims in any event.

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