“Pension reforms aim to promote medium- and long-term economic growth and not for the budget the day or the next day. Conducting structural reforms is necessary to emerge from the pandemic," the minister noted during an international webinar on pension in Jakarta on Wednesday.
Nazara highlighted that the pension ecosystem reform was related to the role of deepening the financial system since pension was one of the sources of funding for development.
However, the minister pointed to the challenges still encumbering Indonesia, considering its economic structure was still higher in the informal sector that had not covered much of the pension scheme.
Three business entities or institutions in Indonesia manage pension funds: state-owned insurers Taspen and Asabri, Workers Social Security Agency (BPJS Ketenagakerjaan), and private pension institutions.
From a social security perspective, Nazara highlighted the government’s role in new programs accommodated through the Job Creation Law, one of which is related to the Job Loss Guarantee program (JKP).
Despite several programs, the minister noted that JKP differed from pension though still focused on the labor market.
"From a social security perspective, it is very important to look at current programs and recently the Job Creation Law. The JKP is a new program, and the government takes on a role in that program," he stated.
The minister placed significant weightage on reforms, particularly amid an economic downturn and tremendous pressure in the wake of the COVID-19 pandemic that had resulted in negative economic growth across the world, barring only a few that recorded positive growth.
According to Nazara, under such circumstances, people expect the state to encourage medium- and long-term economic growth, including through a series of structural reforms, including the pension ecosystem.
If a country makes no endeavors, including failing to boost structural reforms at this time, the minister believes the country's economy will decline while other nations would start clocking positive growth when the pandemic ends. "During a crisis, reforms must be conducted that allow the country to have medium- and long-term growth prospects," he added.
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