Indonesia has entered an aging society, with approximately 35 million people aged 60 and over (12% of the population) projected to increase to 67 million, or 20%, by 2045. However, old-age protection remains very limited. Approximately 88% of the workforce does not yet have pension rights, while only a small proportion of seniors receive pension benefits. This situation necessitates reform of the old-age social security system, in line with Indonesia's accession process to the OECD, which begins in 2024.
This study develops the OECD recommendations into three complementary policy options: expanding the coverage of the Old Age Security (JHT) and Pension Security (JP) programs for non-wage workers and micro-enterprises with government subsidies, lowering the JP participation threshold to include small businesses, and gradually increasing JP contribution rates over the medium term. These three steps are considered crucial for expanding social protection, maintaining the sustainability of the pension system, and strengthening the economic resilience of Indonesia's elderly population.