The Ministry of Finance projects that approximately 100 million Indonesians could retire without pension savings by 2038, raising concerns about the nation’s labor system. This shortfall is attributed, in part, to current savings rates, with most individuals setting aside only around 3 percent of their income, significantly less than the recommended 10 percent for financial security.
Limited Pension Coverage
Pension coverage in Indonesia remains limited, particularly for those working in the informal sector. According to Qisha Quarina, Ph.D., a labor expert from the Faculty of Economics and Business Universitas Gadjah Mada (FEB UGM), the existing pension security program, managed by BPJS Ketenagakerjaan, is primarily designed for formal, wage-earning employees.
Data from the National Labor Force Survey (Sakernas) in August 2025 indicated around 61.8 million formal workers in Indonesia. Though, participation in the pension program among this group has not yet reached 25 percent.
Vulnerability of Informal Workers
Informal workers are particularly vulnerable, lacking access to pension protection under current schemes. While some may have access to the Old-Age Security program (JHT), funds are often withdrawn before retirement, diminishing their value when needed. Qisha Quarina explained, “I see that the pension security scheme is still oriented toward formal workers.”
Currently, data focuses on participation numbers rather than the actual impact of pension benefits on long-term welfare. There is no comprehensive data measuring whether withdrawals from programs like JHT actually improve recipients’ financial well-being.
Potential Future Challenges
Indonesia is entering a pre-aging society phase, meaning a large portion of the productive population will reach retirement age in the coming decades. If current trends continue, the government may need to increase social assistance programs, such as elderly benefits under the Family Hope Program (PKH), potentially shifting the financial burden to younger generations through taxation.
Frequently Asked Questions
What is the projected number of Indonesians who may retire without pension savings?
The Ministry of Finance projects that around 100 million Indonesians may face retirement without pension savings by 2038.
What percentage of formal workers in Indonesia are currently covered by the pension security program?
As of August 2025, active participation in the pension security program stood at around 15.2 million participants, meaning coverage has not yet reached 25 percent of formal workers.
Who is most vulnerable to lacking pension protection?
Informal workers, or non-wage workers, are the most vulnerable group because they generally lack access to pension protection under existing schemes.
As Indonesia’s population ages, what steps might be necessary to ensure financial security for its citizens?
