Low Pension Readiness: Elderly Depend on Families
Financial readiness for retirement remains a significant challenge as the elderly population continues to grow. Research by the DBS Foundation notes that 82.96 per cent of elderly households still depend on the income of working family members, while less than 1 per cent rely on savings and investments as their primary economic lifeline.
This condition indicates that the majority of elderly households still rely on the productive-age generation to meet economic needs. This challenge is poised to intensify as Indonesia’s population structure shifts towards an ageing society. The research, titled ‘Indonesia Towards an Ageing Population: How Ready Are We?’, states that the proportion of Indonesia’s elderly population reached 12 per cent in 2025 and is projected to exceed 20 per cent by 2045. The increasing number of seniors makes financial preparedness before entering non-productive age increasingly vital.
On the other hand, public access to financial services is relatively high. For the 18-50 age group, financial inclusion reaches 93.5-95.1 per cent with financial literacy at 72.1-74.1 per cent; however, ownership of savings or pension funds has only reached 5.37 per cent, and understanding the importance of pension funds stands at 27.79 per cent.
This gap shows that access to financial services does not automatically translate into retirement preparation. The DBS Foundation research suggests that expanding more flexible pension schemes, particularly for informal sector workers and entrepreneurs, is necessary to broaden the coverage of pension programmes.
Mona Monika, Head of Group Marketing & Communications at PT Bank DBS Indonesia, stated that the issue of an ageing society impacts various age groups. “An ageing society is a critical issue for us because it has implications for all generations. At the DBS Foundation, we believe that preparation for an ageing population must begin during the productive years,” Mona said in Jakarta on Thursday.
According to Mona, preparing for an ageing population encompasses several aspects, ranging from education, health, and employment to financial literacy, inclusion, and retirement planning.
The challenge of retirement preparation is also linked to the employment conditions of the elderly. The research notes that 55.32 per cent of the elderly are still working, and 8lar84.75 per cent of them are employed in the informal sector.
Meanwhile, 59.42 per cent of the national workforce is in the informal sector. This group of workers faces relatively low and uncertain incomes, as well as more limited access to employment benefits and formal pension schemes.
Changes in family structure also affect the ability of households to support elderly family members. The total fertility rate has dropped from 3.11 children per woman in the early 1990s to 2.13 in 2024 and is projected to reach 1.97 by 2045.
This condition means that the number of productive-age family members available to share the financial responsibility and care for parents is likely to become increasingly limited. The financial dependency of the elderly on families must therefore be viewed alongside changes in demographic patterns and household structures.
Woro Srihastuti Sulistyaningrum, Deputy for Coordination of Family Quality Improvement and Population at the Coordinating Ministry for Human Development and Empowerment, stated that preparation for old age must be undertaken at every stage of life. “We need to ensure that every stage of life receives the appropriate attention, from early life, education, and productive age, through to entering old age,” Woro said.
DBS Foundation research suggests that retirement preparation cannot rely solely on individual saving habits. Such readiness must be supported by education, decent work, financial capability, the expansion of pension programme coverage, and social protection that functions throughout the life cycle.
With the number of elderly projected to continue rising, the ability of the public to build income sources for their later years will increasingly determine the level of intergenerational dependency. Expanding access to pension instruments, especially for workers outside the formal sector, remains a key challenge in facing these shifts in population structure.