Abstract WP07-06

Maliki. Indonesia Social Security and Support System of the Indonesian Elderly.

Although population of Indonesia is currently relatively young with lower percentage of elderly, the absolute number of the elderly population is large and, in the future, the growth rate of the elderly population is greater than this of the productive ages. Unlike other Asian countries elderly-focused policy remains under explored in Indonesia. The Indonesian government is still underway to develop their universal coverage of social security for the elderly. So far, the pension program is limited to government employees and army personnel or small coverage of employees from private companies. This paper investigates how the Indonesian elderly finance their retirement period without sufficient social security program. Using data developed by National Transfers Account (NTA) project, we find that the Indonesian elderly is characterized by their longer period of working after retirement age (officially at 55) particularly of those who are self-employed, transfering more to the children, and depending on their assets for their retirement. Cameron (2000) and McKee (2005) previously supported the findings and revealed the high productivity among the elderly in Indonesia. Our findings are consistent with the lifecycle hypothesis where, in the absence of pension system, the retirement period consumption is financed by the accumulated assets from their productive ages. The Indonesian elderly prepared the ir retirement by accumulating assets during their productive ages and finance the deficits of their retirement consumption. In addition, they also transfers to their children. An increasing role of assets accumulation in the future emerges as the comprehensive social security is not yet under their retirement agenda.

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