Indonesia's Pension Programs Hampered by Early Withdrawal of JHT Benefits

October 23, 2025 | 08:03 pm

TEMPO.CO, Jakarta - The Ministry of Finance revealed that early withdrawal of the old-age security (JHT) claims has become one of the challenges posed for Indonesia's pension programs. According to ministry data, JHT claims in 2023 reached Rp45.64 trillion, meaning, the savings scheme is often used as emergency funds instead of long-term savings.

The director of Pension Fund, Insurance, and Actuarial Development at the Ministry of Finance, Ihda Muktiyanto, said the majority of age-old savings are claimed due to participants resigning or leaving their jobs. "Most claims are made when participants are still productive and young, due to urgent needs," Ihsa said during the Indonesia Pension Fund Summit 2025 in South Tangerang on Thursday, October 23, 2025. "However, there are some instances of consumptive needs."

Ihda explained that ideally, the JHT benefits are estimated at 12.6 percent of the replacement ratio. In this ideal scenario, participants work for 32 years and never withdraw their funds. However, in Indonesia, the average JHT balance at retirement is Rp56.2 million, equivalent to 3.7 percent of the replacement ratio. The median JHT balance at retirement is even lower at Rp24 million, or 1.6 percent of the replacement ratio.

According to Ihda, this situation limits the ability to support the needs of the elderly. "This phenomenon also indicates that without the right policy design, the pension assets of the participants will be depleted prematurely, leaving workers without adequate guarantees as they enter retirement age," he said.

Additionally, Ihda also underscored the low coverage of Indonesia's pension program. In 2024, out of a total of 144.6 million workers, only 23.6 million were registered as mandatory pension program participants. This figure is equivalent to 16.32 percent of the total workforce.

Ihda believes this data indicates that the majority of workers in Indonesia, especially in the informal and SME sectors, are still at significant risk when they reach retirement age. "They are not covered by adequate pension guarantees," he stated.

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