Ensuring a Comprehensive, Responsive, and Financially Sustainable Social Protection for the Elderly, at-Risk Informal Workers, and People with Disabilities in Indonesia


This policy brief argues for a comprehensive, responsive, and financially sustainable social protection in Indonesia beyond Covid-19 on three marginalized groups: the elderly, at-risk informal workers, and people with disabilities. It proposes an aged and disability-responsive social protection system for the elderly through social pensions, for people with disabilities through social assistance transfers coupled with meaningful concessions, and expansion of social insurance for employment membership for at-risk informal workers. The goal is to gradually reduce the budget allocation of social pensions as the ownership of pensions for the productive group improves while ensuring the fiscal sustainability of the overall social protection system.




G20 countries, including Indonesia are aging; it is estimated that in 2020, 591 million (12 percent) of the population of 4.88 billion in the G20 countries were above 65 years of age (World Bank Development Indicators 2020). Japan (28 percent) has the highest proportion of people over 65 years of age while it is estimated that 17.23 million Indonesians (6.3 percent) are in this age cohort (World Bank 2020).

Poverty in Indonesia has a strong age dimension with the elderly having the highest poverty rates.[2]The elderly poverty rate ranges from above 10 percent to 18 percent as it increases with age. Elderly women have a higher poverty rate than men at the age of 60–74 years, while the poverty rate for elderly men is higher than for women at the age of 75 plus years (Susenas 2021, as calculated by TNP2K in 2022). These elderly portraits are similar to those found in other countries.

Furthermore, the number of people with disabilities is also on the rise as the global aging trend leads directly to increased numbers of people with disabilities. It is estimated that one billion people (15 percent) globally live with some form of disability—with approximately 2–4 percent experiencing significant functional difficulties. Most people with disabilities are aged over 60 years and 46 percent of elderly live with either moderate or severe disabilities (WHO 2011).

In Indonesia, it is estimated that 21.9 million people (8 percent of the total population) have functional limitation/disability.[3] It is estimated that 11.5 million of them (36 percent) are above 60 years of age; and 9.3 million are the working age group (5.3 percent) (Susenas 2021 as calculated by TNP2K in 2022). As the issues of aging and disability are directly interconnected, it is crucial to understand the interplay between them to rethink strategies to ensure a comprehensive, responsive, and financially sustainable social protection system.

Indonesia’s population is dominated by the productive age group of 19–59 years that constitutes approximately 58 percent of its 272 million people in 2020. In total, there are around 130 million workforces in Indonesia; where around 60 percent of them work in the informal sectors and only 40 percent work in the formal sectors (Sakernas 2020). The total membership of the social insurance for employment scheme (BPJS Ketenagakerjaan, 2020) was around 50.7 million, which only represents 39.4 percent of the workforce.



A Twin-track Proposal to Protect Our Elderly and the Future Elderly, through Elderly Grants/Social Pensions and a Matching Defined Contribution (MDC)

The Covid-19 pandemic is a test of the resilience of the social protection system in many countries, including Indonesia. Approximately 1,700 social protection measures have been taken globally to mitigate the impacts of Covid-19—with about 689 social protection measures implemented by the G20 countries (ILO 2022). It is estimated that more than 53 percent of the global population (approximately 4 billion individuals) were not sufficiently protected by any social protection measures (UN 2021).

An assessment of Indonesia’s social protection system prior to, and during, Covid-19 shows that Indonesia has all the basic components toward comprehensive social protection, based on a lifecycle approach for vulnerable populations. Firstly, the non-contributory scheme/ social assistance is funded by the government (through its general revenues), in the form of cash and non-cash transfers and in-kind assistance. Beneficiaries are usually individuals, families, and households who are generally poor and vulnerable. The contributory schemes consist of social insurance for health and for employment that require regular contributions from their members. The livelihood scheme, which can either be funded by the government and/or the private sector, aims to increase access to more stable and decent jobs/livelihoods‒for example through training and opening access to job-related information (TNP2K 2018, updated in 2021). Nevertheless, the coverage and budget commitment for the elderly, vulnerable workers, and people with disabilities continue to be limited.

Indonesia’s elderly experience limited access to social protection, especially access to old age savings/pensions. The entire population should ideally have social protection regardless of their economic status; however, the highest rate of pensions ownership is amongst households from the higher socioeconomic welfare deciles (8 to 10), ranging from above 10 percent up to 30 percent of households with pensions ownership (Susenas 2021, as calculated by TNP2K in 2022). This shows that having old age savings/pensions are unaffordable.

Based on the review of social protection coverage for the elderly in 2022, approximately 74 percent of Indonesia’s elderly from the bottom 40 percent of socioeconomic welfare have benefited from JKN through the non-contributory scheme as fully subsidized beneficiaries. Unfortunately, only 4 percent of Indonesia’s elderly receive social assistance and approximately 86 percent of the elderly do not have adequate access to old age savings insurance/pensions (Appendix: Table 1).

The Government of Indonesia continues its commitment to reforming its social protection system so that all groups across the lifecycle have comprehensive access to social protection. To address some of the challenges described above, the first proposal to better protect our elderly (the existing and the future ones) is to expand the coverage of social assistance for the elderly (elderly grants/ social pensions) while simultaneously expanding the membership of at-risk workers in the informal sector through a matching defined contribution (MDC) scheme in the social insurance for employment programs.

Since 2018, TNP2K has been advocating and proposing for the expansion of coverage for the elderly through an elderly grant/ a social pensions program. This proposal could start with those who are 70 plus years of age with no access to pensions (pension-tested) and are outside the current elderly benefit under PKH and ASLU programs. The proposal has been shared and is currently under discussion with relevant government ministries.

TNP2K Elderly Grant/ Social Pensions Proposal

Proposed ProgramProposed BeneficiariesBenefit Option (IDR)Projected Budget per year (IDR)
Elderly Grants/ Social Pensions (Pension Tested)Every citizen who is 70 plus years old, with no access to pension.

It is estimated that there are 9.5 million elderlies of 70 plus years old

IDR 300,000 per month

per elderly

IDR 34,2 trillion

Source: TNP2K 2022 proposal utilizing the 2021 Susenas.

Note: **Projection of Susenas 2021 beneficiaries of social pension is around 9.5 million elderly who are above 70 years (excluding beneficiaries of Elderly PKH component of around 1.1 million).

Box 1: Elderly Grants/ Social Pensions and Its Impacts

Over 100 countries have been implementing social pensions[4] as a form of social protection for the elderly. Most of the G20 countries (except Japan and Saudi Arabia) have implemented universal schemes where the eligibility criteria are mostly means-tested with some variation of income or assets or pensions-tested. Their coverage is varied coverage (Pension Watch 2022). In Indonesia (by the ASLU and elderly under PKH), it only reaches around 0.3 percent of its 29 million elderly population, compared to more than 50 percent coverage in Canada, South Africa, Australia, and the Republic of Korea.

Several studies have shown much evidence of the benefit for a country that implements social pensions. Apart from being a tangible form of the government’s commitment to provide protection for its elderly population, the implementation of social pensions also has various positive impacts by reducing the poverty rate for the elderly and improving access to health care, and the social and economic conditions of the elderly and their family members. Social pensions can also provide additional income for the beneficiaries and strengthen the elderlies’ purchasing power. For families or households with an elderly member, the additional income support provided to the elderly will encourage better productivity for the family and society in general as there is a reduction in the burden that is usually borne by the family or household (Global Ageing Organization 2007).

To further explore the potential of implementing an elderly grant/ a social pensions program in Indonesia, in parallel, it is also important to increase the membership of workers to ensure sufficient access to the social insurance for employment programs (particularly for their old age savings/pensions). Understanding the high number of informal workers in Indonesia, TNP2K together with the Ministry of Finance (MoF) has been exploring the potential of a Matching Defined Contribution (MDC)[5] scheme as an incentive for informal workers who are at-risk, to enroll as members of the contributory scheme as part of the broader social protection system.

Box 2: Simulation of an MDC Scheme

Based on a simulation conducted by MoF in 2022, a participant’s contribution is estimated to be within the range of IDR 25,000 to IDR 100,000, with the matching contribution provided by the government in a ratio to participant contributions varying from 2:1 to 1:1. As an illustration, in a 1:1 ratio, where participants and the government each contribute IDR 100,000 per month, the pension benefits value that will be received by participants as they enter retirement age is IDR 534,000 present value or 21.4 percent of the minimum wage.

To obtain the above benefit, the assumptions used are 33 years of contribution accumulation or membership, 20.5 years of decumulation, and the difference between investment returns and a 1 percent increase in wages. To adapt to the varying abilities to pay of participants, the option of combining the number of multilayer contributions and the varying amounts of matching contributions for each layer of contributions will also be considered (MoF KEM-PPKF 2023).

Implementation of elderly grants/ social pensions for the elderly while simultaneously expanding membership of workers into the social insurance for employment programs should consider the government’s fiscal capacity through incremental expansion. For example, the potential beneficiaries for elderly grants/ social pensions can be selected based on several categories such as the minimum age eligibility (i.e., providing the elderly grants/ social pensions benefits only to the elderly over the age of 70 years old) or limiting eligibility to those with no access to formal pensions. These categories can gradually be adjusted while trying to encourage the current productive group to start contributing to the old-age savings/pensions scheme (under BPJS Ketenagakerjaan)[6]. The introduction of a social pension alongside reforms to the social insurance for employment scheme should be carefully considered to ensure the two are designed to be complementary and that private/voluntary contributions are incentivised.

Expanding the Social Assistance Transfer for People with Disabilities coupled with Meaningful Concession Proposal

People with disabilities are usually at higher risk of experiencing exclusion and limited opportunity to various basic services and access. These range from education and health to social protection, of being poorer in nutrition and health outcomes, of lower levels of employment, higher living costs, and tendency to have higher rates of poverty (WHO 2011). Having disabilities can contribute to significant direct and indirect costs that must be borne not only by people with disabilities, but also other family/household members. People with disabilities in Indonesia also have limited access to existing social protection programs. More than 90 percent do not yet have sufficient access to either social assistance or social insurance for employment programs; however, about 74 percent of people with disabilities have access to PBI-JKN (Appendix: Table 2).

Households with members with moderate or severe disabilities are twice as likely to be out of the labor force, and three times more likely to be poor, compared to those without (Prospera, 2021). Additionally, the poorest households with members with severe disabilities spend up to 20 percent more money to meet their basic needs. A study estimated that the additional cost of having people with disabilities increases the households’ expenditures by approximately IDR 227,559 (Prospera, 2021).

To compensate families for the additional costs incurred and provide people with disabilities with more equal opportunities, the second proposal is a twin-track strategy toward a more responsive social protection system for people with disabilities. The twin-track strategy is to expand the coverage of its disability benefits (such as the ASPD program) through a transfer of IDR 300,000 per month coupled with the provision of meaningful disability concessions such as free education, free or discounted public transportation, discounted utilities, reservation for public housing programs, tax credit, and subsidized health insurance.

TNP2K Non-Contributory Disability Grants Proposal

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Source: TNP2K 2022 proposal by utilizing the 2021 Susenas.

Note: *Ideally for all people with disabilities, however, noting the fiscal limitation, the disability grants are proposed in stages; started specifically for people with disabilities from the lowest 40 percent of 2-69 years. This group is projected to reach 6.2 million people (with the assumption that elderly with disabilities who are over 70 years will receive the social pensions/ elderly grants).

Concessions are a popular and cost-effective way not only to partially compensate for the additional costs for the majority of people with disabilities, but to promote more equal access for them to basic services and facilities. Incentives for the supply side (concessions providers) are further required to motivate them to offer concessions. To implement the twin-track disability grant and meaningful concession strategy, the government will need to have a strong commitment and encourage active contributions and involvement from various stakeholders. These include local governments, the private sector, development partners, non-governmental organizations, organizations of people with disabilities, research institutions, and the community.

Alternatives toward a more Sustainable Social Protection Financing

Prior to the Covid-19 pandemic, the Indonesian Government had budgeted approximately IDR 135 trillion (0.85 percent of its Gross Domestic Product[7] in 2019) for social assistance programs[8][9]. When the pandemic hit in early 2020, the government immediately added approximately IDR 149 trillion (0.72 percent of GDP[10]) to its regular budget to finance additional social protection to mitigate the shocks experienced by its population. As the Covid-19 pandemic progressed in 2021 and 2022, the government maintained its commitment to provide social protection for its impacted population by expanding the coverage of some programs and initiating new programs. In 2021, around IDR 264 trillion (1.7 percent of 2020 GDP)[11] was allocated for social protection programs (including the social insurance for health subsidy)[12]; and in 2022, the government allocated a budget of more than IDR 250 trillion (1.5 percent of 2021 GDP or 12.9 percent of its annual expenditures)[13] for social protection[14].

Indonesia has several options in considering its fiscal space for the proposed social protection reforms. One possible alternative to finance the increased investment in social protection reforms is to reallocate existing energy subsidy; which for 2022 were initially budgeted at IDR 134.03 trillion (about 7 percent of the state’s budget) but now stand at IDR 578,1 trillion[15] (18 percent)[16]; to eligible population/people’s energy subsidy transformation. As much as 86 percent of the energy subsidy is enjoyed by groups who are more well-off (TNP2K 2021); thus, re-allocating these subsidies toward progressive social protection programs would benefit most citizens during the most volatile stages across their lives. There is also considerable room for consolidating several small programs within the government’s existing portfolio of cash and in-kind transfer schemes which would potentially free up fiscal space to use towards financing a comprehensive social protection system (TNP2K 2018). Additionally, it is also important to create more fiscal space by increasing the country’s tax ratio and expanding the membership of social insurance for employment in the formal sectors to ensure a sustainable social insurance contribution.

Lastly, for Indonesia to achieve such significant economic and social impacts requires an increase in investment in its social protection system like the investment levels of other upper-middle-income countries. According to the UN, the Covid-19 pandemic has caused the widening of the social protection financing gap by around 30 percent. To ensure at least a basic level of social protection through social assistance and social insurance, the upper-middle-income countries such as Indonesia, would need to invest an additional 5 percent of their GDP to minimize the gap (UN 2021). To ensure the country can recover from the impacts of the pandemic, benefits from the demographic dividend and expansion of its labor force, the government needs to be more committed to reforming its social protection system to be more comprehensive, responsive, and sustainable for all, by gradually increasing investment in social protection from the current levels of less than 2 percent to at least 5 percent of its annual GDP.


Badan Pusat Statistik (BPS) (Statistics Indonesia). 2021. “Survei Sosial Ekonomi Nasional (Susenas) Indonesia March 2021.”

Global Ageing Organization. 2006. “Social Pensions Facts and Figures.” http://globalag.igc.org/pension/world/social/socialpensions.htm

Holzmann, R., and R. Hinz. 2005. “Old Age Income Support in the 21st Century: The World Bank’s Perspective on Pension Systems and Reform.” Washington, DC: World Bank.

International Labour Organization. 2022. “Social Protection Monitor.” Updated in June 2022. https://www.social-protection.org/gimi/gess/ShowWiki.action?id=3426

———. 2020. “Social Protection Responses to COVID-19 Crisis Around the World 2020.” https://www.social-protection.org/gimi/gess/ShowWiki.action?id=3417

Javier, F. 2022. “Berapa Rupiah APBN untuk Subsidi Energi pada 2012-2022?” Tempo, 22 May 2022. https://data.tempo.co/data/1428/berapa-rupiah-apbn-untuk-subsidi-energi-pada-2012-2022

Kementerian Keuangan (Ministry of Finance). “Informasi APBN 2020.” https://www.kemenkeu.go.id/media/13730/informasi-apbn-2020.pdf

Kementerian Keuangan (Ministry of Finance). “Informasi APBN 2021.” https://www.kemenkeu.go.id/media/16835/informasi-apbn-2021.pdf

Kementerian Keuangan (Ministry of Finance). “Informasi APBN 2022.” https://www.kemenkeu.go.id/media/18902/informasi-apbn-2022.pdf

Kementerian Keuangan (Ministry of Finance). “Kerangka Ekonomi Makro dan Pokok-Pokok Kebijakan Fiskal 2023.” https://fiskal.kemenkeu.go.id/files/kemppkf/file/1653025074_kemppkf2023.pdf

Kidd, S., L. Wapling, D. Bailey-Athias, and A. Tran. 2018. “Social Protection and Disability in South Africa.” Development Pathways Working Paper. https://www.developmentpathways.co.uk/wp-content/uploads/2018/07/Social-protection-and-disability-in-South-Africa-July-2018.pdf

Larasati, D., K. Huda, A. Cote, S.K. Rahayu, and M. Siyaranamual. 2019. “Inclusive Social Protection for Persons with Disability in Indonesia.” TNP2K Policy Brief. http://www.tnp2k.go.id/download/65217190113-PB%20DisabilitiesEng-web.pdf

Larasati, D., R.S. Milawati, and D. Nugroho. 2022. “Maintaining and Expanding Membership as an Effort to Ensure the Sustainability of the Social Insurance for Employment Program.” Jakarta: TNP2K. http://tnp2k.go.id/downloads/maintaining-and-expanding-membership-as-an-effort-to-ensure-the-sustainability-of-the-social-insurance-for-employment-program

Mitra, S., M. Palmer, H. Kim, D. Mont, and N. Groce. 2017. “Extra costs of living with a disability: A review and agenda for research.” Disability and Health Journal 10 (4): 475-484.

Prospera. 2021. “Biaya Tambahan Menyandang Disabilitas: Konsep dan Konteks di Indonesia. Presentation to Bappenas webinar on 23 December 2021.

Tim Nasional Percepatan Penanggulangan Kemiskinan (TNP2K) (National Team for the Acceleration of Poverty Reduction). 2018. “The Future of the Social Protection System in Indonesia: Social Protection for All (Sistem Perlindungan Sosial Indonesia ke Depan: Perlindungan Sosial Sepanjang Hayat Bagi Semua).” Jakarta: TNP2K. http://tnp2k.go.id/download/33117200829-TNP2K%20The%20Future%20of%20Social%20Protection-Full%20Report-EN.pdf

Tim Nasional Percepatan Penanggulangan Kemiskinan (TNP2K) (National Team for the Acceleration of Poverty Reduction). 2021. “Reformasi Kebijakan Subsidi LPG Tepat Sasaran: Mengurangi Kesenjangan dan Menjamin Pemerataan.” http://tnp2k.go.id/download/28133Buku_Policy%20Paper%20Reformasi%20Kebijakan%20Subsidi%20LPG%20Tepat%20Sasaran.pdf

United Nations Population Division. 2019. “World Population Prospect 2019.” https://population.un.org/wpp/

United Nations. 2021. “Investing in Jobs and Social Protection for Poverty Eradication and a Sustainable Recovery.” Secretary-General’s Policy Brief, 28 December 2021. https://unsdg.un.org/sites/default/files/2021-09/SG-Policy-Brief-on-Jobs-and-Social-Protection-Sept%202021.pdf

World Bank. 2020. “World Development Indicators 2020.” https://databank.worldbank.org/source/world-development-indicators

World Health Organization (WHO). 2011. “Global Report on Disability, 2011.” Chapter 2: Disability, A Global Picture, p.19-46.


Table 1: Overview of Indonesia Social Protection for the Elderly

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Source: Consolidated by TNP2K in 2022 from several resources.

Note: * Ministry of Social Affairs (MoSA) Administrative Data of 2021; ** PT Asabri and PT Taspen 2018 Financial Report Information as June 2021; *** BPJS Ketenagakerjaan 2020 Financial Report; and **** BPJS Kesehatan.

Table 2: Overview of Indonesia Social Protection for People with Disabilities

A picture containing text Description automatically generated Source: Consolidated by TNP2K in 2022 from: *MoSA 2021 for PKH and ASPD; ** Sakernas Feb 2020 for Access to the Social Insurance for Employment; and *** TNP2K calculation with Susenas 2021 for JKN.

  1. In 2021, the national poverty rate was 10.14 percent (Susenas 2021).
  2. The calculation of people with disabilities by utilizing Susenas 2021, conducted by TNP2K in 2022 is based on the definition of disability with six criteria referring to the Washington Group Question Set of Disability (Short-Set Questions on Functioning/WG-SS) consisted of vision, hearing, cognition (remembering), mobility, self-care (mental) and communication.
  3. Social pension (non-contributory scheme) is a form of assistance from the state to its citizens which begins when a person enters retirement age. Social pensions differ from other types of pension schemes, in that the eligibility criteria do not require prior individual contributions but are, for example, based on criteria of citizenship or residence and age or other criteria established by each country (Holzmann et al. 2005.).
  4. The MDC program is considered as one of the pension programs schemes with the intention to increase and expand the participation of informal workers. The main concept of this scheme is that the government allocates a budget to contribute to paying part of the participant’s contribution for those who have registered/contributed to the social insurance for employment program. The members’ contribution paid by the government served as an incentive for contributing members where in the certain period, the accumulated contributions are for the members benefits.
  5. BPJS Ketenagakerjaan is a legal entity establish to administer the social insurance for employment programs in Indonesia as mandated by the Law of National Social Security System (UU No. 40/2004)
  6. Indonesian Gross Domestic Product (GDP) of 2019: IDR 15,833 trillion (BPS 2019).
  7. Author’s calculation utilizing information from MoF on 2020 State Budget/APB in https://www.kemenkeu.go.id/media/13730/informasi-apbn-2020.pdf.
  8. The budget allocation for social assistance described, included Conditional Cash Transfers (Program Keluarga Harapan: PKH), the cash transfer for the poor students programs (Program Indonesia Pintar: PIP), the food assistance programs (Bantuan Pangan Non-Tunai: BPNT), social assistance for the elderly and people with disabilities (Asistensi Sosial Lanjut Usia: ASLU and Asistensi Sosial Penyandang Disabilitas: ASPD), and the non-contributory scheme of fully-subsidised beneficiaries of the National Health Insurance (Penerima Bantuan Iuran: Jaminan Kesehatan Nasional: PBI-JKN).
  9. Ibid.
  10. Indonesian GDP of 2020: IDR 15,434 trillion (BPS 2020).
  11. Author’s calculation utilizing information from MoF on 2020 State Budget/APB in https://www.kemenkeu.go.id/media/16835/informasi-apbn-2021.pdf
  12. Indonesian GDP of 2021: IDR 16,970 trillion (BPS 2021).
  13. author’s calculation utilizing information from MoF on 2020 State Budget/APB in https://www.kemenkeu.go.id/media/18902/informasi-apbn-2022.pdf
  14. In May 2022, the Minister of Finance requested an additional energy subsidy budget (for its fuel subsidy/BBM, 3 Kg LPG and electricity subsidy for below 3.000 VA. This request has been granted by the legislature and, for 2022, the budget energy subsidy stands at IDR 578,1 trillion.
  15. For 2022, the allocated state expenditures are at IDR 1,944.5 trillion (https://www.kemenkeu.go.id/media/18902/informasi-apbn-2022.pdf) but as a result of an additional energy subsidy budget which now reach IDR 578,1 T, the 2022 state expenditures also increase to IDR 3.169,1 T https://www.cnbcindonesia.com/news/20220701104033-4-352058/harga-tak-naik-subsidi-bbm-cs-2022-bengkak-jadi-rp-578-t

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