News
Provincial tripartite consultation on old-age income security in West Java, Indonesia
Christianus Panjaitan
The ILO organized provincial consultations on old-age income security in Bandung on 12-14 June 2023 with thirty representatives of tripartite constituents from selected districts and municipalities in West Java.
The event aims to facilitate dialogues among the tripartite constituents and experts on reform options to meet the objective of promoting certainty, adequacy, coverage, and sustainability of old age income security system. Similar events will be organized in East Kalimantan and Central Java. Results of the provincial consultations will be presented and discussed in a national consultation to be conducted later this year, which expected to produce a set of recommendations for policy reform submitted to the Government.
The meeting discussed current states of elderly's social and economic conditions, old-age income security system in Indonesia, international standards and practices, and direction of reform policy.
Ms. Elda Pardede, a lecturer from University of Indonesia presented current conditions of elderly in Indonesia, concluded that Indonesia is entering aging population with more than 10% of its population aged 60 and above, with old age income gaps between men and women, former formal and informal economy workers, and between elderly living in urban and rural areas, and that old-age income protection policy reform is needed. Mr. Arief Anshory, senior lecturer from University of Padjadjaran presented findings of an assessment of selected disadvantage groups who are left behind in various development dimensions related to SDGs. The study found that elderly in rural areas are the furthers left behind group, particularly in terms of education and assets, and urgent actions to protect this group are called by the study.
Ms. Nindya Putri Sutedjo, an official of Ministry of Manpower, presented details about existing old-age income security schemes and newly enacted Law on Development and Strengthening the Financial Sector, which calls for harmonization of old-age pension schemes in Indonesia.
Mr. Ippei Tsuruga, Programme Manager of Social Protection Programme of ILO Country Office for Indonesia and Timor Leste, presented international standards and practices of old-age income security programmes, challenges of existing system in Indonesia, and options for policy reform. The reform options were presented based on an actuarial analysis of the current system in Indonesia and proposed three arrangements of coexistence of mandatory old-age social protection floor and social insurance pension schemes, and voluntary complementary scheme.
Through the discussions, participants realized and acknowledged the importance of extending coverage to all citizens, and enhancing coverage, benefits and contribution of the existing defined benefit pension benefits scheme (Jaminan Pensiun/JP) and the defined contribution old-age saving scheme (Jaminan Hari Tua/JHT). With regard financing modalities, majority of the participants representing workers were hesitant to pay additional contribution. All participants agreed that such reform should start now.
A joint recommendation was presented and signed by the participants, proposing establishment of social pension scheme, a mandatory tax-funded pension floor scheme for all citizens; enhancement of coverage of existing JP scheme by making it mandatory to all wage earners and enhancement of the benefit to 75%; and enhancement of coverage of the JHT scheme by making it mandatory for all wage and non-wage earners. The recommendation also suggests increasing the contribution rate to 6%, with 2% and 1% contributions from employers and workers, respectively, and 3% contribution from government.