Mletiko, 14 May 2012
“Financing Indonesia’s Ageing Population” appearing in Southeast Asian Affairs 2012, edited by Daljit Singh and Pushpa Thambipillai, has just been published by the Institute of Southeast Asian Studies, Singapore, 2012.
The chapter has the following sections: Ageing Population in Indonesia; Threat of Population Explosion in Indonesia in the 1960s; Threat of Population Explosion of Older Persons in 2010s; From Liability to Asset; Two Policy Options for Financing the Ageing Population in Indonesia (alternative demographic scenarios and an integrated policy package for the whole population); and Concluding Remarks.
The sub-section on “integrated policy package for the whole population” includes: Promotion of Active Ageing; Abolishment of Retirement Age, Seniority System, and Juniority System; Development of Market-based Insurance and Pensions; and Creation of Affordable and Just Universal Social Protection and Pensions for Everybody.
The following is the concluding remarks of the chapter.
In the 1960s and 1970s, Indonesia has policies on how to finance the baby boomers when they were young and unproductive, with its strong family planning programme. However, the current government has not been sufficiently prepared to face the the threat of explosion of older persons, when the baby-boom generations become old and unproductive. Today Indonesia faces a different question: how to finance the rising number and percentage of the baby boomers who will soon become older persons. Indonesia will again have a high dependency ratio. This time, the high dependency ratio will reflect older persons, who still consume but have stopped producing. The economic consequences of the explosion of older persons can become disastrous for the younger persons, as the younger persons need to shoulder much heavier burdens to take care of the older persons.
This chapter provides recommendations on how to manage the economic consequences of the explosion of older persons with a life-long approach, considering all ages of the population and not only the older persons.
In short, the policy is to transform the older persons from a liability to an asset. (*)