UUM COLLEGE OF BUSINESS

SCHOOL OF ECONOMICS, FINANCE AND

BANKING

BWRR3043 EMPLOYEE BENEFITS MANAGEMENT

GROUP B

SECOND SEMESTER SESSION 2018/2019 (A182)

INDIVIDUAL ASSIGNMENT

Lecturer: Dr.Habibah bt. Tolos

Submitted by: Fakhira Putri (249846)

SUBMISSION DATE: MAY 15TH, 2019

 I. INTRODUCTION

Private Retirement Scheme (PRS) is a defined contribution pension scheme which

allows people to voluntarily contribute into an investment vehicle for the purposes of

building up their retirement fund. This is especially useful for those who wish to grow

their retirement fund and invest but aren't savvy in the area of investment. However,

people has mistaken PRS as a substitute for the EPF scheme. The PRS complements the

EPF, offering individuals the ability to build another fund that they can tap into when

they retire, rather than relying on EPF alone. On top of that, having a voluntary scheme

in addition to the EPF allows private company employees and self-employed persons to

voluntarily diversify their contributions towards their retirement.

Unlike the EPF system, it is free to invest any amount, there is no pressure to allocate

a part of the salary each month at a fixed rate. It largely depends on how much is the

willingness to invest. The PRS providers will help to illustrates the amount of

contribution can be made to reach particular goals if the investors are unsure of how

much to contribute.

There is no such thing as risk-free investment. However, the PRS makes it possible

to customize the investment choices based on individuals risk appetite. There also must

be awareness that customizing will affect the expected return. It is also possible to invest

in more than one PRS provider. There is a freedom to choose more than one fund offered

by the different PRS Providers. Finally, it is also allowed to switch funds within the PRS

system at any time, or change to another PRS provider once a year, subject to terms

imposed by the PRS provider.

In Indonesia, the there is DPLK (Dana Pensiun Lembaga Keuangan) or Financial

Institution Pension Fund which believed to have the same function as PRS. DPLK is a
Pension Fund formed by banks or life insurance companies to organize a Defined

Contribution Pension Program or Program Pensiun Iuran Pasti (PPIP) for individuals,

both employees and independent workers. DPLK is voluntary. A company can include

its employees in the DPLK program as mandated by Law No. 11/1992 concerning the

Pension Fund. Currently on the market there are around 24 DPLK that can be chosen by

the community to provide pension plans for each employee or company in Indonesia.

II. CASE SCENARIO

Mr. Khairunas, 51 years old works as a civil servant in Indonesia. Mr. Khairunas

earns RM 60,000 annually. Mr. Khairunas has one wife, Mrs. Wishna, 52 years old. Mrs.

Wishna also works as a civil servant in Indonesia and she earns RM 60,000 annually.

Both Mr. Khairunas and his wife do not have any loan that they have to pay. Mr.

Khairunas has 3 children. Two of Mr. Khairunas’ children are still studying. One child is

already having a job. Mr. Khairunas’ children are not covered in any insurance plan.

However, as a civil servant, Mr. Khairunas and his family get to be covered with Badan

Penyelenggara Jaminan Sosial (BPJS) Kesehatan or Social Security Administrator

specifically in health sector, which is a health insurance by the government and Mr.

Khairunas’ salary is deducted every month to pay for this. Another thing Mr. Khairunas

will get as a civil servant is Government Pension when he is retired. The government

pension amount would be RM1,300 and it is going to be paid monthly.

To make sure that he will live a comfortable life when he retired, Mr. Khairunas is

looking for Private Retirement Scheme (PRS). Mr. Khairunas plans to purchase

Indonesia’s PRS also known as Dana Pensiun Lembaga Keuangan (DPLK) either from

DPLK AIA Financial or DPLK Allianz Indonesia. As Mr. Khairunas will retire when he
is 58 years old, Mr. Khairunas believes that this purchase can help to guarantee his future

when he is retired. Mr. Khairunas is considering to purchase

III. DESCRIPTION ON PRS POLICIES CHOSEN

1. DPLK AIA Financial

DPLK AIA Financial is a legal entity established by AIA Financial, which engages

in the defined contribution pension fund management sector called Financial Institution

Pension Fund (DPLK). DPLK AIA Financial commits to provide customers’ satisfaction

and maintain their confidence. This program is designed so that every DPLK Participant

will be financially prepared when they reach retirement age, as regulated in Law Number

11 Year 1992 on Pension Fund (“Pension Law”). An application for formal approval by

the Ministry of Finance (now FSA or OJK) under the Pension Law is set out in a separate

document. This report has no status under the law but is designed to provide a broadly-

based guide to the financial and operational aspects of the “DPLK”. The DPLK is

designed exclusively for distribution through the Corporate Solutions (Pension &

Employee Benefits) network

There are three sources of contribution, it can be from participants, participants and

employer on behalf of participants, or employer on behalf of participants. Each of them

has different names of plan under AIA. There are Sevpay, Sevpay Plus, DPLK Pooled

Fund (PPUKP), DPLK Individual Account, and Dana Pesangon.

First, Sevpay plan is the type product which becomes insurance complement. SevPay

is a collection of life insurance products that contain elements of cash value,

administered individually, where these products are created to complement existing

products, which can meet the alternative solutions needed by the company to provide

employment obligations. The benefits that will be obtained are certain funding from the
company, the transparent program, because it is an individual account that can be seen at

any time, life insurance coverage (if the participant dies), payment of benefits is made at

the same time and with no tax deduction.

Second, Sevpay Plus which is the complement of existing insurance type of product.

It is a collection of life insurance products that contain elements of cash value, grouped

administration (Pooled Fund), not individually and created to complement existing

products, which can meet the alternative solutions needed by the company to provide

employment obligations. The benefits that will be obtained in this product is basically

the same with Sevpay.

Third, DPLK Pooled Fund (PPUKP) which is a DPLK product that is organized and

managed based on the principle of the pooled fund through a cooperation agreement

between DPLK AIA Financial and the company and not managed on an individual

account. This program provides added value in terms of taxation, how to pay benefits

and the arrangement of rights to benefits due to employees. The main advantages of this

product is that the pension contributions can be used as expenses by the company so that

they can be deducted from corporate income tax 25, and can be used as tax planning for

the company (Tax Planning).

Fourth, DPLK Individual Account. This product is a pension plan for an employee

with a defined contribution that provides pension benefits with the aim of maintaining

the income of participants in retirement and their heirs if they die before retirement age.

Thus, it is hoped that the welfare of participants and their family can be maintained, not

burdening others at retirement. The benefits that will be obtained from the product are

the guarantee of income sustainability in old age, certain funding from the company,
discipline of saving, tax facilities (contributions as deductions for employee income tax),

and free from confiscation.

Last product from DPLK AIA Financial is Dana Pesangon. This product is prepared

to complement existing products in order to meet the alternative solutions needed by the

company to provide employment obligations. Severance fund is a collection of life

insurance products that have a cash value and are grouped administered (Pooled Fund)

and not individually. The advantages from this product are certainty that participants will

get severance rights when they stop working, in the form of cash value that has been

donated by the company, life insurance coverage (if the participant dies) and the

payment of benefits at once.

2. DPLK Allianz Indonesia

DPLK Allianz Indonesia is a financial institution pension fund program for

companies and their employees. In addition to the pension program, the Allianz

Indonesia Pension Fund can also be used as a severance program. There are 2 schemes of

DPLK program in Allianz. They are DPLK program scheme as a pension benefit and

DPLK program scheme as a pension benefit and for severance compensation.

For DPLK program scheme as a pension benefit the contribution option can be from

the company and /or employees and it is flexible. It took some nominal per cent of salary

or as needed. Later, the contribution goes directly into the participant’s account. On the

other hand, for the DPLK program scheme as a pension benefit and for severance

compensation, the contribution is only from the company and the amount is depends on

the company’s financial ability. Then, the contribution goes to the pool fund account of

the company, not allocated to the employees directly.

 The advantages of these product are that the participants will be guarantee of their

pension plans for both participants and families, participant contributions can reduce

personal income tax, and the funding made could give the sense of security for the

participants on the availability of funds in the future and last but not least, the participant

funds are placed on deposit instruments so they are not being taxed.

What differs the DPLK Allianz Indonesia program with other DPLK are the diverse

on investment choices where participants can choose one or combine available

investment options. Then, the choice of contributions that are flexible and can be tailored

to the needs or financial capabilities of the participants, and the options for payment of

benefits vary such as normal pension benefits, accelerated pension benefits, dead pension

benefits, and disability pension benefits.

IV. REASONS ON THE SELECTION

Mr. Khairunas has learned and understand fully all of the thigs about the products

offered by AIA and Allianz about DPLK. After doing some consideration for both AIA

and Allianz, Mr. Khairunas believes that DPLK Individual Account is the best product

for him to purchase. As he has no loan to pay and he also has no insurance, as some of

the products from AIA are offering DPLK as the completion of the existing insurance.

Mr. Khairunas also want to live a good life in the future when he retired, he wants to

make sure that his welfare and his families can be maintained, not burdening others at

retirement.

Moreover, most of the products and schemes are offered for participants under a

company. As a civil servant in Indonesia, Mr. Khairunas might not want to purchase

those products as it does not fit his need as good as DPLK Individual Account offered by

DPLK AIA Financial.

 V. REFERENCES

Razak, H., Tan, J., & Razak, H. (2015, January 28). A Guide To The Private Retirement

Scheme (PRS). Retrieved from https://ringgitplus.com/en/blog/Budgeting-Saving/A-

Guide-To-The-Private-Retirement-Scheme-PRS.html

Yunus, S. (2017, January 22). Apa itu DPLK ? Retrieved from

https://www.kompasiana.com/syarif1970/58847e1a147b616214b24409/apa-itu-dplk?

page=all

Asuransi Dana Pensiun DPLK-AIA Financial Indonesia. (n.d.). Retrieved from

http://www.aia-financial.co.id/id/our-products/pension/dplk.html

Asuransi Dana Pensiun DPLK-AIA Financial Indonesia. (n.d.). Retrieved from

http://www.aia-financial.co.id/id/our-products/pension/dplk-individual-account.html

Asuransi Dana Pensiun Sevpay-AIA Financial Indonesia. (n.d.). Retrieved from

http://www.aia-financial.co.id/id/our-products/pension/sevpay.html

Asuransi Dana Pensiun Sevpay-AIA Financial Indonesia. (n.d.). Retrieved from

http://www.aia-financial.co.id/id/our-products/pension/dplk-pooled-fund.html

Asuransi Dana Sevpay Plus -AIA Financial Indonesia. (n.d.). Retrieved from

http://www.aia-financial.co.id/id/our-products/pension/sevpay-plus.html

Asuransi Pensiun Dana Pesangon-AIA Financial Indonesia. (n.d.). Retrieved from

http://www.aia-financial.co.id/id/our-products/pension/dana-pesangon.html

Dana Pensiun Lembaga Keuangan (DPLK). (n.d.). Retrieved from

https://www.allianz.co.id/produk/asuransi-kumpulan/dana-pensiun-lembaga-

keuangan-DPLK
VI. APPENDICES

1. Appendix 1 (DPLK AIA Financial)

2. Appendix 2 (DPLK Allianz Indonesia)