Informal workers face gaps in retirement saving

JAKARTA: Many Indonesians are making do without old-age savings plans as they grapple with unstable incomes and employment.

Nabilla, a freelance videographer based in Bandung, West Java, constantly feels insecure about her income and can only focus on building “emergency funds”.

“I don’t have retirement savings at the moment, because I don’t know how much I’m going to earn next month, so I’m keeping my savings as a safety net in case my income falls or comes in below my target,” she told The Jakarta Post last Thursday.

Nabilla acknowledged that old-age security “is highly important” but said she would rather keep her savings accessible to support emergency needs and long-term goals instead of locking the money away until retirement.

“I’m still in my 20s and still have a long life ahead of me, so instead of preparing for pension funds, I prioritise building my savings for my current and long-term needs,” she said.

Ferman, a 30-year-old resident of Solo, Central Java, who has been working independently in the creative industry for nearly a decade, also struggles to manage his finances and build retirement funds.

He believes it is crucial to prepare for old age as soon as possible but often finds it hard to set aside money because of “fluctuating income and rising cost of living”.

For Riska, a 25-year-old who takes teaching jobs and provides personal shopping services, retirement saving is an afterthought. She said the importance of building pension funds depended on each individual’s priorities but added that she would give it more consideration once she started a family.

For now, Riska said she wanted to enjoy her income for herself, as she just started her freelance work six months ago.

“Retirement is still too far away for me to think about saving for it,” she told the Post last Friday.

The government recently has underscored the need to expand pension fund coverage to informal sector workers, which represent roughly 60% of the country’s 155 million workforce.

“This is a concern for all of us, ensuring they also receive social protection, because every citizen has the right to social protection,” Manpower Minister Yassierli said during an event to kick off Pension Fund Month 2026 on Sept 6, as quoted in a statement.

Nabilla welcomed the government’s intention to broaden pension fund coverage to informal workers but said she was not ready to make regular monthly contributions typically required by pension fund schemes.

“I don’t know if there’s any pension fund programme dedicated to informal workers.

“The challenge is that I have to be more proactive in finding out about the programme, its benefits and the required contributions,” she said, adding that “even if there’s a contribution, it can still be challenging, because, in addition to managing our finances, we have to allocate money for pension contributions.”

Ferman said his long-term retirement planning was hampered by difficulties managing his finances, while Riska noted unstable income as the main issue.

The Financial Services Authority (OJK) has led government efforts to boost retirement preparation through information campaigns, given that only 22% of the population are considered to have sufficient knowledge in this area, far behind the general financial literacy rate of 69% and financial inclusion at 93%.

According to OJK records as of July, only 30.67 million out of the 150 million workers have some degree of pension fund coverage.

In 2025, the participation rate among informal workers stood at just 2.19%, with 1.93 million of the total 88 million informal workers participating in pension programmes offered through voluntary schemes and the Workers Social Security Agency (BPJS Ketenagakerjaan).

At the Indonesia Pension Fund Summit 2026 last Friday, the OJK identified four structural challenges in expanding pension participation, including low literacy, affordability, accessibility and trust.

To address these challenges, the OJK aims to generate a “new source of growth” by increasing participation among formal and informal workers, offering flexible pension programmes, expanding distribution through digital platforms and strengthening partnerships within the pension fund ecosystem.

“With increased participation, greater contribution and broader access, we hope, pension funds can provide a larger, more stable pool of long-term funds,” said Ogi Prastomiyono, the OJK’s head of insurance, guarantee and pension funds, as quoted in a statement.

Arif Novianto, a labour researcher and lecturer at Tidar University, told the Post earlier this month that the low participation among informal workers was not merely an awareness issue, as many simply lacked the economic capacity for long-term savings.

Instead of focusing on awareness programmes, he said the government should build a simplified, flexible and affordable participation scheme, as well as increasing subsidies or state contributions for low-income earners.

Measures that could be implemented included establishing an integrated system for digital platform workers as well as introducing new participation networks, such as by connecting workers with the country’s cooperatives scheme, labour unions or payment systems. — The Jakarta Post/ANN