Social security system

I am writing in response to an article written by Dr. Hasbullah Thabrany in The Jakarta Post, May 27, in which he responded to my May 4 article on the National Social Security System Bill (SJSN) currently being considered by the House of Representatives.

The reason why workers and employers alike do not put much faith in the proposed SJSN scheme is because the benefits offered by the current social security schemes (Jamsostek, Taspen, and Askes) are very small, due to the low return on investments in these schemes, which is far below the market interest rate.

In addition, there are many anecdotal accounts of poor governance that exist in the schemes' management. Without major reforms, it is feared that the SJSN scheme would suffer the same fate as the current social security schemes. That is why workers are reluctant to invest their salaries.

The Chilean private social security scheme mentioned by Dr. Thabrany in his article was created because the country suffered from the same problems as our social security system today (low benefits, poor governance, and a rapidly aging population).

After more than two decades of implementation, it has been credited with increasing economic growth in the country, and improving the investment climate, savings rate, and workers' retirement benefits, and has led to Chile's economy being considered one of the strongest in Latin America.

Due to this success, other countries have established similar private social security schemes. They range from developed countries, such as Australia, Sweden, and the United Kingdom to developing countries such as Argentina, Mexico, and Poland. In addition, several other countries such as Brazil, China, and India (developing countries); Russia (a former socialist country); and Italy and the United States (developed countries) have either planned, or already started, the reform of their national social security schemes, using the private social security system.

Instead of pursuing a monopolistic government-run social security scheme, such as has been abandoned by most countries in the world, Indonesia should seriously consider adopting a private social security scheme, since it has proven successful in increasing economic growth, investment returns, and workers' welfare in all the countries that have adopted it.

ALEX ARIFIANTO The Smeru Research Institute Jakarta