Only 6% of seniors will receive pension insurance in 2050, Worker Poverty in Old Age?

Rusli (left) Chairman of the Aerospace Digital Transportation Workers Union, Victoria Fanggidae (right) Deputy Director of The PRAKARSA, Darmawan Prasetya (right) Social Policy Researcher The PRAKARSA.
Photo source: activity documentation

Jakarta, The PRAKARSA - The PRAKARSA the research and policy advocacy institute organizes PRAKARSA The 13th talk with the theme "Eight Years of the Social Security Program in Indonesia: Reflections on the Protection of Workers' Welfare in Old Age". The activity, which was held on Tuesday (14/11), discussed the problem of the slow increase in the number of participants in the Old Age Security and Pension Guarantee programs, as two programs in Indonesia designed to provide guaranteed income during old age. As a result, the number of workers who have old age security is less than 15%. 

“Currently, only 14,8% of the elderly population in Indonesia receives pension insurance. This figure places Indonesia in the bottom 3 of countries with the number of pension recipients in the ASEAN region, this figure is above Laos (6,3%) and Cambodia (0,1%). "Unfortunately, only 6% of seniors aged 65 years+ will receive pension insurance in 2050," said Ippei Tsuruga, Social Protection Program Manager for ILO Indonesia & Timor Leste. 

Even so, the number of pension insurance participants in Indonesia has continued to increase since 2017, but it is relatively slow. "The number of active pension insurance participants in Indonesia continues to increase, although slowly, namely: 10,63 million people (2017) to 13,65 million people (2022)," said Hendra Nopriansyah, Deputy for Strategic Planning and Transformation, BPJS Employment Indonesia . 

Furthermore, Nopri also revealed that the management of pension funds in BPJS Employment consists of several aspects. "In terms of participation, Indonesia has a fairly high number of workers in the informal sector. During the Covid-19 period, many pension insurance participants switched to work in the informal sector, where the policy scheme in Indonesia still does not allow informal workers to join the pension guarantee. "Apart from that, the amount of benefits that will be obtained is still low compared to per capita expenditure, this makes many middle and upper classes in Indonesia not join the current pension guarantee scheme," said Nopri. 

There are several factors that make many people in Indonesia reluctant to join the pension guarantee program. "There are several problems, as stated by BPJS, which are still often associated with aspects of health, not income in old age, understanding risks and financial loss "In Indonesian society it is still low, the perception of children as an investment for old age, and the collective awareness of formal workers still low in registering for pension insurance, these things make many Indonesians reluctant to register for pension insurance," explained Victoria Fanggidae, Deputy Director. The PRAKARSA. 

The impact of the lack of pension coverage on the elderly generation is the emergence of the phenomenon of poverty and working in old age among the elderly group. "If the pension coverage is only 6%, then you can imagine there will be a lot of poor elderly people in the future," said Victoria or who is usually called Ria. 

Several recommendations were proposed "One of the options we have made is for Indonesia to implement a National Pension Guarantee, namely a pension benefit of 1 million rupiah per month provided that the premium contribution is 4% of salary in 2026, increased by 1% every three years until it increases by 8% in 2038. This design can cover 20 million elderly people in Indonesia in the first year and the country needs to spend 118 trillion rupiah," said Ippei. Apart from increasing fees and improving the system. "Pension guarantees need to be improved through implementing universal pension guarantees, improving the governance of social security funds, and the government needs to discipline companies that are reluctant to register their employees in the pension guarantee system," concluded Ria.

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