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View all search resultsDemographic bonus: Who pays the price tomorrow?
With only 5 percent pension inclusion, the demographic bonus is on a collision course with an aging reality. It is time to stop blaming individual financial planning and start fixing a system that leaves 120 million workers behind.
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Elderly people fill out forms and wait in line on Nov. 23, 2025, to register or renew their Free Service Card (KLG) during Car Free Day at the Hotel Indonesia traffic circle in Central Jakarta. The event provides an opportunity for seniors aged 60 and above to obtain free access to public transportation services such as TransJakarta, MRT Jakarta and LRT Jakarta, offered by the Jakarta administration. (The Jakarta Post/Iqro Rinaldi)
T
he demographic bonus is often celebrated as a catalyst for national development. Yet, without a truly inclusive old-age protection system, this blessing could turn into a structural burden for the next generation.
Based on the Population Profile Analysis released by Statistics Indonesia (BPS), the nation has enjoyed a demographic bonus since 2012, a window of opportunity expected to remain open until 2035. By 2030, an estimated 68.01 percent of the population (approximately 294.11 million people) will be of working age. Theoretically, this presents a rare economic engine: a vast workforce, dynamic entrepreneurs and a massive domestic market.
However, the tide will eventually turn. Over time, the number of dependents will inevitably grow faster than the workforce available to support them as today’s youth gradually age. A study by IFG Progress (2021) projects that Indonesia’s demographic bonus will conclude in 2038. By 2045, the demographic structure will shift significantly, characterized by a substantial increase in non-productive individuals.
In line with this trend, Indonesia’s dependency ratio is projected to reach 51.33 percent by 2040. This suggests that within the next 14 years, every working-age individual will effectively be responsible for supporting one non-working person. This shift fuels the rise of the "sandwich generation", workers squeezed between the financial demands of their children and the economic needs of their aging parents.
While the emergence of this generation is often dismissed as a result of personal failure in financial planning, the root of the problem lies in a policy framework that is not yet inclusive. Change must begin now, before the window of the demographic bonus closes permanently.
One of the most critical, yet overlooked, social safety nets in Indonesia is the pension system. A robust pension fund provides income protection for the elderly, reduces the risk of old-age poverty and prevents excessive dependence on family members or state welfare.
Historically, Indonesia’s formal pension system began with PT Taspen (1963) and PT Asabri (1971), primarily serving civil servants and security personnel. Recognizing the limitations of such a narrow scope, the government enacted Law No. 11/1992 on Pension Funds, allowing the private sector to offer benefits through Employer Pension Funds (DPPK) and Financial Institution Pension Funds (DPLK).
