Have you ever heard of pension funds? Retirement funds are old age savings that are very important for everyone to have. For more details, see the definition of pension funds, types, and benefits in this article!
Pension funds are one of the important financial posts that must be prioritized and prepared in advance.
Not only employees or employees who need pension funds because you who are entrepreneurs must also prepare for it.
This is important so that in your old age, when you are no longer productive, you can still get basic necessities guaranteed with regular income.
So that you understand better, see the meaning of pension funds and their benefits in the review below.
Definition of Pension Fund
Before we discuss the meaning of a pension fund, we should first understand what a pension is.
According to the KBBI, retirement is a condition in which a person "doesn't work anymore because his term of office has finished".
Meanwhile, the definition of a pension fund according to the ojk.go.id is a legal entity that manages and runs programs that promise pension benefits.
There is also the so-called Financial Institution Pension Fund (DPLK), which is a pension fund institution formed by banks and life insurance companies to conduct individual retirement programs.
Pension fund participants can get pension benefits, the amount of which is adjusted to the nominal contribution, years of service, and the results of the development of the pension fund.
So, the main function of a pension fund is to provide its participants with guaranteed income at retirement age or at a time when you are no longer able to work productively.
Type of Pension Fund
After understanding the meaning of pension funds above, then we will discuss what types of pension funds you need to know.
According to Article 1 of Law Number 11 of 1992, it is stated that there are three types of pension funds in Indonesia, namely:
Employer Pension Fund
The definition of Employer Pension Fund is a pension fund established by a person or entity that employs employees, always the founder, to organize a Defined Benefit Pension Program or a Defined Contribution Pension Program, for the benefit of part or all of its employees as participants, and which creates obligations to the employer.
Profit-Based Pension Fund
The definition of a Profit-Based Pension Fund is an Employer Pension Fund that organizes a Defined Contribution Pension Program, with contributions only from the employer based on a formula linked to the employer's profits.
Financial Institution Pension Fund
Definition of Financial Institution Pension Fund is a Pension Fund established by a bank or life insurance company to organize a Defined Contribution Pension Program for individuals, both employees and independent workers, which is separate from the Employer Pension Fund for employees of the bank or life insurance company concerned.
Pension Fund Benefits
Basically, the main benefit of a pension is to provide regular monthly income guarantees to participants or their heirs.
In addition to your daily living expenses, you can also use pension money to get health services to meet other secondary needs.
The benefits of pension funds according to Article 1 of Law Number 11 of 1992 are divided into four types, namely:
Normal Retirement Benefits
This benefit will be paid when the participant reaches normal retirement age or thereafter.
Expedited Retirement Benefits
Accelerated Retirement Benefits will be paid to participants who enter retirement age earlier before the normal retirement age.
Disability Pension Benefits
This pension benefit will be paid to participants with disabilities.
Postponed Retirement Benefits
Deferred Pension Benefits are intended for participants who have stopped working before the normal retirement age, but the payment is postponed until the participant reaches the appropriate retirement age.
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That's the meaning of retirement funds and their benefits that are important for you to understand.
Have you prepared your retirement fund? Don't forget to complete it with life insurance so you can get a more complete old age guarantee!