Indonesia Plans Pension Reforms as Elderly Population Surges

Indonesia’s Central Statistics Agency (BPS) reports that the share of people aged 65 and over rose from 8.43 % in 2015 to 12 % in 2024. BPS projects the proportion to reach 20.31 %—about 65.8 million individuals—by 2045. This rapid ageing signals a demographic shift for the country.

Japan faces a comparable situation, with over 29 % of its population aged 65+ in 2025, creating pressure on its pension system and public finances. In Indonesia, pension coverage remains limited; pension literacy was only 27.79 % and financial inclusion 5.37 % in 2025. Low participation raises the risk of greater reliance on social assistance and adds fiscal strain on younger workers.

The government is expected to broaden pension schemes, simplifying contributions and offering tax incentives, as contributions are currently exempt from Income Tax (PPh) until benefits are withdrawn. Such measures aim to raise old‑age protection coverage and stabilize fiscal burdens amid an ageing population. Strengthening the pension system is crucial for ensuring retirees’ welfare without overburdening the active labor force.