The Economist For The Age Of Retirement Of ASN 70 Years Is Not Realistic For Indonesia

JAKARTA - Paramadina University economist Wijayanto Samirin revealed that the retirement age in Indonesia is currently at 58 years old and the lowest in the world compared to other countries such as India, China, Thailand, Vietnam, Malaysia, and Singapore, which on average have a retirement age of between 60 and 63 years.

He explained that Indonesia's low retirement age is also in line with the national life expectancy which reached 71.4 years, lower than these countries which are in the range of 72.5 to 84 years.

According to Wijayanto, the retirement age of 58 years is considered too low, because many state civil servants (ASN) are at the peak of professional maturity at that age and the proposed increase in retirement age must be carried out carefully because it has a long-term impact.

"The 58-year retirement age is too low and in many cases ASN actually enters the retirement era when they are mature. The idea of increasing retirement age needs to be done carefully, because it has a very long-term effect," he said, Sunday, May 25.

However, he considered that increasing retirement age could have a positive impact on reducing the government's fiscal burden, for delaying pension payments.

But on the other hand, Wijayanto said that this policy could also hinder the absorption of young workers and reduce the entry of ASN with new skills generally owned by the younger generation.

"This is also detrimental in terms of employment and meeting the needs of ASN with new skills, which generally can only be done by a much younger generation," he said.

Wijayanto considered that the proposal to increase retirement age to 70 years was unrealistic and if applied, Indonesia would become the country with the highest retirement age beyond developed countries such as Japan (64 years), New Zealand, Switzerland, and Belgium (65 years), Germany, and the UK (66 years), as well as the Netherlands, Australia, and Italy (67 years), all of whom have life expectancys of over 81.6 years to 85 years.

"Even if the idea of increasing retirement age is raised, the number 70 is very unrealistic, this will place Indonesia as the country with the highest retirement age, much higher than developed countries," he said.

He gave an example, like Denmark, which has a life expectancy of 82.5 years, where currently retirement age is 67 years old, and plans to increase retirement age to 70 years in 2040 with preparation for a transition of 15 years.

"An important lesson from Denmark is that the decision to increase retirement age has only taken effect after 15 years from the time the decision was made, this is to allow a smooth transition process and to describe the retirement age policy as a very long-term policy that requires careful calculation," he explained.

Therefore, Wijayanto suggested that if the government wants to increase the retirement age, the policy should be carried out in stages, for example from 58 to 62 years, and the long-term fiscal impact.

"The increase in retirement age should not be too drastic, but gradually, for example from 58 to 62 years; Policies do not apply instantly, thus allowing smooth transition processes; Retirement age is distinguished by sector, for sectors that require physical strength (military, police, etc.) lower retirement age; Demographic analysis and labor needs (number and skill), as well as analysis of long-term fiscal impacts, before a decision is made," he concluded.