The sentiment is understandable, considering the recent series of government announcements that it would collect more from people’s pockets amid persistent low inflation and declining domestic consumption last year.

Statistics Indonesia (BPS) recorded a year-end inflation rate of 1.57 percent in December, the lowest since the agency began tracking consumer prices more than 60 years ago.

At the same time, the presidential election and the transition of power has put President Prabowo Subianto and his cabinet in the position to implement large-scale programs, including the nationwide free nutritious meals program for children.

Such ambitious and costly schemes led the government to announce plans to implement a mandatory public housing savings program called Tapera and raise the value-added tax (VAT) to 12 percent, both of which received backlash and were shelved. 

The fact that both programs were planned by Prabowo’s predecessor, Joko “Jokowi” Widodo, did not seem to matter anymore, as people appeared to harbor certain frustrations resulting from the sluggish economic conditions and politicians’ maneuvers prioritizing power over the interests of the people.

A recent Manpower Ministry decision to continue the implementation of a 2015 regulation that requires the state pension age to be raised to 65 by the end of 2045 received the same angry response. 

Critics said the policy, which mandates that the state pension age be raised to 59 this year, would delay payouts and create financial difficulties for new retirees.

While it is tempting to join in the outcry, it is also worthwhile to look at the underlying problems with the pension system in Indonesia.

Raising the state pension age is common across countries as economic conditions improve and life expectancies increase as a result of healthier lifestyles and better health services. For Indonesia, life expectancy at birth has continued to rise for decades, reaching 74.15 years in 2024.

Raising the pension age will reduce the financial strain on the public pension system, as it will reduce the number of concurrent pension recipients and lower overall pension spending.

The Workers Social Security Agency (BPJS Ketenagakerjaan), the state insurer that manages the country's pension funds, meanwhile, is experiencing challenges on other fronts that would make it problematic for the government not to raise the retirement age.

A study by IFG Progress, a think tank funded by the Indonesia Financial Group (IFG), a state-owned holding company for financial services, found that low pension savings and contributions could cause the fund to experience a deficit in 2038.

The group noted that according to BPS, only 40.89 percent of the workforce was employed in the formal sector, while data from the Manpower Ministry showed that only 38 percent of formal workers participated in the Old-Age Security (JHT) program. An even smaller proportion, just 11 percent, participated in pension benefits (JP), because of the inaccessibility of the public pension program for informal workers.

Moreover, contribution rates for JHT and JP are low, with mandatory contributions set at 8.7 percent of worker income, one of the lowest rates in Asia, second only to Thailand.

The pension program could become a ticking time bomb if the government and the private sector refuse to address these problems.

Raising the pension age is a good step but not a silver bullet to solve the brewing problems in the system. The government must improve informal workers’ access to the public pension system while solving the problems of insufficient savings and low contributions from existing members.

Employers must increase their participation in registering their workers and paying pension contributions. It may seem easier to maintain the lower pension age and save costs by substituting high-paying senior employees for low-paying young ones, but it is more important to engage in discussions on how to ensure the welfare of retiring employees. 

It wouldn’t hurt for the government and employers to care more about the Indonesian workers.