Hadi, Abdul; Vidya ama, Yogi; Bad iah, Bad iah; Emese, P ihoda
A icle
Adequacy o he pension sys em: A quali a i e in e iew o
Indonesian ci il se ice pensione s in Kapuas Regency
Economies
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MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel
Sugges ed Ci a ion: Hadi, Abdul; Vidya ama, Yogi; Bad iah, Bad iah; Emese, P ihoda (2024) :
Adequacy o he pension sys em: A quali a i e in e iew o Indonesian ci il se ice pensione s in
Kapuas Regency, Economies, ISSN 2227-7099, MDPI, Basel, Vol. 12, Iss. 12, pp. 1-18,
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Ci a ion: Hadi, Abdul, Yogi
Vidya ama, Bad iah Bad iah, and
P ihoda Emese. 2024. Adequacy o
he Pension Sys em: A Quali a i e
In e iew o Indonesian Ci il Se ice
Pensione s in Kapuas Regency.
Economies 12: 328. h ps://doi.o g/
10.3390/economies12120328
Academic Edi o : Robe Czudaj
Recei ed: 14 Oc obe 2024
Re ised: 19 No embe 2024
Accep ed: 25 No embe 2024
Published: 29 No embe 2024
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A icle
Adequacy o he Pension Sys em: A Quali a i e In e iew o
Indonesian Ci il Se ice Pensione s in Kapuas Regency
Abdul Hadi 1,* , Yogi Vidya ama 2, Bad iah Bad iah 3and P ihoda Emese 4
1Doc o al School o Economic and Regional Sciences, Hunga ian Uni e si y o Ag icul u e and Li e Sciences,
2100 Gödöllo, Hunga y
2Canbe a School o Poli ics, Economics and Socie y, Uni e si y o Canbe a, Canbe a 2617, Aus alia;
[email p o ec ed]
3Mas e o De elopmen S udies, Lambung Mangku a Uni e si y, Banja masin 70123, Indonesia;
[email p o ec ed]
4
Ins i u e o Ag icul u al and Food Economics, Szen Is an Campus, Hunga ian Uni e si y o Ag icul u e and
Li e Sciences, 2100 Gödöllo, Hunga y; [email p o ec ed]
*Co espondence: [email p o ec ed] o [email p o ec ed]
Abs ac : A ound h ee million pensione s ecei e he Indonesian ci il se ice pension bene i .
This bene i is he main sou ce o income o he majo i y o ci il se ice pensione s. This pape
examines he adequacy o his pension bene i om he pe spec i e o pensione s in Kapuas Regency.
Th ough quali a i e esea ch, i een semi-s uc u ed in e iews we e conduc ed o in es iga e he
ole o pension bene i s in main aining he in e iewees’ li es yles and s anda ds o li ing. All he
in e iewees pe cei ed ha he pension bene i could co e hei basic needs, bu o mos o hem, i
only co e ed 25% o hei o al expendi u es. Despi e his, he eplacemen a e o he ake-home pay
om he pension bene i is s ill accep able based on he ILO s anda d. While some can adjus o li e
wi h basic needs, o he s choose o ind ano he sou ce o income a e e i emen . The e o e, al hough
he amoun is s ill highe han he po e y line and he minimum wage, he indings sugges he
e i emen a e is conside ed meage .
Keywo ds: adequacy; pe cep ion; ci il se ice pensione s; pension sys em; Indonesia
JEL Classi ica ion: H5; H6; H55
1. In oduc ion
Ci il se ice oles a e among he p e e ed occupa ions o Indonesians, mainly due
o his coun y’s age pension scheme (Piki an Rakya 2023). Indonesia is s ill s i ing
o es ablish a manda o y public pension sys em o ensu e social secu i y o all i s ci i-
zens (Hadi e al. 2023). Howe e , ci il se an s in Indonesia we e p o ided wi h ci il
se ice pension (CSP) plans in 1956, when he P esiden signed legisla ion abou pension
spending. Law No. 11/1969 is now in o ce, so he CSP egula ions ha e changed once
again (Mulia i 2013).
The pay-as-you-go plan, based on he De ined Bene i (DB) scheme is used in Indone-
sia’s CSP plan. An Indonesian ci il se an is eligible o ecei e employee pension bene i s
i hey ha e wo ked o he go e nmen o wen y yea s o mo e and a e i y yea s o age
o olde . In Indonesia’s CSP plan, he pension basis o compu ing he pension bene i is
he employee’s basic sala y o he p eceding mon h, as de e mined by he ele an sala y
laws. As long as he mon hly bene i o employees does no su pass 75% o hei p ima y
pension bene i s, hey will ecei e 2.5% o he basic pension o each e m o se ice (Hadi
e al. 2022). The CSP bene i s a e no indexed o in la ion; he pension bene i s inc ease
when he go e nmen egula es he inc ease in ci il se an s’ sala ies.
Cu en ly, a ound h ee million pensione s ecei e CSP paymen s (KORPRI 2024). Fo
he majo i y o hem, his pay is he mos signi ican sou ce o income (Hadi e al. 2022).
Economies 2024,12, 328. h ps://doi.o g/10.3390/economies12120328 h ps://www.mdpi.com/jou nal/economies
Economies 2024,12, 328 2 o 18
The ques ion is whe he his paymen can be expec ed o ul ill he needs and well-being
o hese pensione s/ e i ees. A s udy by Moeis e al. (2022) indica ed he need o mo e
inancial secu i y o hese Indonesian pensione s.
P o iding adequa e suppo is a c ucial objec i e o many e i emen income schemes.
Since he beginning, he e has been no uni o m concep o he co esponding de ini ion,
measu es, o h eshold (OECDiLib a y 2023). This is pa ly because o he di e en iews
on how people adjus hei consump ion due o changes in hei incomes. The Eu opean
Commission (2018) desc ibes adequacy in h ee ways. The i s is de ined acco ding o
he abili y o he pension income o help pensione s a oid po e y. Acco ding o he
second de ini ion, adequacy is de e mined by he abili y o eplace he income ea ned
be o e e i emen . The hi d de ini ion de ines adequacy acco ding o he e i emen pe iod
ha can be co e ed (Eu opean Commission 2018). Policymake s commonly employ wo
echniques o de e mine adequacy: a ce ain h eshold o income, whe e i is conside ed
app op ia e, o based on p e- e i emen income, speci ically a pe cen age eplacemen a io
(RR) (PLSA 2016).
The cu en pension scheme o ci il se an s p o ides a mon hly e i emen payou
wi h a maximum mon hly paymen o IDR 4,779,900 (EUR 283.52) (Go e nmen Regula ion
Numbe 8 Yea 2024). This is highe han he minimum-wage le el in his s udy’s ocus
a ea, Kapuas Regency (IDR 3,261,700/EUR 193.47) bu less han he le el in Indonesia’s
capi al ci y, Jaka a (IDR 5,067,381/EUR 300.58) (Kepu usan Gube nu Kaliman an Tengah
Nomo No. 188.44/552/ 2023;Kepu usan Gube nu DKI Jaka a Nomo No. 818 2023).
Fu he mo e, he bene i om hese p og ams is likely o be less han he ecipien ’s cu en
income. Acco ding o he pe manen income hypo hesis (PIH), his will esul in ci il
se an s smoo hing hei consump ion and being mo e inclined o sa e o ga he asse s
o p e en hei quali y o li e om alling a e e i emen . The pension bene i s may
also be inadequa e o depend on and cause people o descend below he po e y line (PL)
(Ande sen 2021).
The issue o CSP bene i s in his egion has ecen ly become mo e p ominen . While he
issue o ci il se an income was allegedly he eason o he co up ion o public o icials
ha b ough down he Soeha o e a in 1998, he decen aliza ion in 2001 b ough a di e en
dimension o his issue since he appoin men and managemen o ci il se an s ha e been
pa ly ans e ed o he local go e nmen (Yunan e al. 2023;Vidya ama 2021). While hei
pension bene i s a e cu en ly paid by he cen al go e nmen , i is conside ing shi ing he
esponsibili y o he local go e nmen s, who ha e he au ho i y o ec ui and pay hei
sala ies (Kencana 2022;Vidya ama 2021). The e o e, i is c ucial o unde s and he a i udes
and beha io s conce ning he adequacy o he cu en pension plans a he local le el since
hei pe cep ions ha e ne e been mapped. In addi ion, hese a i udes and beha io s a
he dis ic le el may a ec he pension plans and hei impac on he le el o de elopmen
in his a ea (Pa k and Hewings 2007;Bu ge 2014;Ba abyal and Nijkamp 2017).
P e ious esea ch conduc ed by Anan a e al. (2021) used a simula ion me hod a he
ca ied ou a he na ional le el conce ning he adequacy o CSP p og ams. They ound
he planned sys em (which will be con e ed om de ined bene i o de ined con ibu ion)
is inadequa e o p o iding income in old age. This s udy aims o look a he pensione s’
pe spec i es on he adequacy o Indonesia’s CSP in Kapuas Regency. The issue o pension
bene i s is c ucial o Kapuas Regency, as almos hal o he ci il se an s a e nea ly o
e i emen age, while being ou side o Indonesia’s popula ion cen e , Ja a–Bali, means
ewe al e na i e job oppo uni ies. In addi ion, his a ea is conside ed o ha e a lowe
cos o li ing han o he egencies in Cen al Kaliman an and a low PL ha p e en s be e
oppo uni ies om being gi en o pensione s o adjus hei consump ion (BPS-S a is ics
Indonesia 2023b).
Fu he mo e, acco ding o he Wo ld Bank (2008), well-designed pension p og ams
seek equilib ium be ween h ee key indica o s: a o dabili y, sus ainabili y, and adequacy.
Sus ainabili y and adequacy a e wo sides o he same coin. Wi hou he o he , nei he
can exis meaning ully. Ul ima ely, e o ms mus seek a p ope balance be ween he
Economies 2024,12, 328 3 o 18
wo objec i es (Eu opean Commission 2010). Rega ding sus ainabili y, Indonesian CSP
spending inc eases annually and places s ain on he coun y’s na ional budge (Hadi e al.
2022). The amoun spen on pensions in 2023 was IDR 142.7 illion (EUR 8,522,413,744).
As o he Indonesian na ional budge , i ep esen ed 5.8% o he go e nmen ’s income,
which was IDR 2443.6 illion (EUR 145,906,631,406) (Angga an Pendapa an dan Belanja
Nega a (Indonesian Na ional Budge ) (2024)). As a esul , al hough Indonesia’s CSP sys em
is unsus ainable (Hadi e al. 2022), he Indonesian go e nmen should main ain i s pledge
o imp o e pension adequacy o pensione s.
CSP bene i s a e no in la ion-indexed, and he Indonesian go e nmen did no aise
ci il se an s’ sala ies om 2020 o 2023, aising c i ical issues abou how well he CSP
sys em p o ec s ci il se ice pensione s om po e y. The e o e, he esea ch ques ions o
his s udy ocus on h ee main issues conce ning he adequacy o he cu en Indonesian
CSP p og am.
Q1: Do he bene i s o he exis ing pay-as-you-go p og am mee e i ed ci il se an s’
inancial needs in Kapuas Regency?
Q2: Can Kapuas Regency pensione s e ain hei p e- e i emen quali y o li e?
Q3: How do pensione s in Kapuas Regency espond o he p esen pension sys em?
This a icle p o ides some impo an insigh s in o CSP bene i s in Indonesia. The e o e,
he indings o his a icle could se e as a good e e ence o na ional pension policy.
The policy implica ions o his s udy could be use ul no only o eade s bu also he
go e nmen o Indonesia (Indonesian policymake s).
This a icle was o ganized in o i e sec ions o achie e i s objec i es. Sec ion 1o his
esea ch begins wi h an in oduc ion, a desc ip ion o he aim o his s udy, and he esea ch
ques ions ha will be add essed. Sec ion 2p o ides a ele an li e a u e e iew ha ocuses
on he adequacy o he pension sys em. Sec ion 3explains he da a-ga he ing and analysis
p ocesses. The indings and a discussion a e hen p o ided in Sec ion 4, ollowed by
he Conclusions.
2. Li e a u e Re iew
2.1. The Objec i es o Pension Sys ems
Almos e e y coun y now has an old-age pension sys em, whose p ima y unc ion is
o p o ide inancial secu i y o olde people, p e en exploi a ion, and educe injus ice in
old age (ILO 2018). The pension sys em se es wo unc ions o indi iduals: consump ion
smoo hing and insu ance (Ba 2011). The consump ion-smoo hing unc ion e e s o
ensu ing a pe son’s p e- e i emen quali y o li e is main ained a e e i emen (le eling
ou spending du ing he ansi ion om employmen o e i emen ). On he o he hand,
he insu ance unc ion p o ec s people om expe iencing po e y in hei old age. In o he
wo ds, he p ima y goal o he pension sys em is o p o ide inancial s abili y o olde
people, which includes alle ia ing po e y and smoo hing indi idual spending (Ba 2018;
OECD 2018).
2.2. Assessing Adequacy
A minimum income s anda d is a s anda d o socially accep able money. The oldes
me hod ope a es acco ding o e e ence budge s anda ds o which people can adjus hei
consump ion (Deeming 2017). Re e ence budge s a e indica i ely p iced baske s o goods
and se ices ha ep esen assumed li ing s anda ds. High-quali y compa able e e ence
budge s can suppo he widescale moni o ing o income adequacy, pa icula ly minimum
income sys ems (Goedemée al. 2015). The e a e se e al me hods o de e mining an
app op ia e h eshold. One s a egy is o de ine a ‘baske ’ ha includes i ems necessa y o
sus aining an app op ia e s anda d o li ing in e i emen —ei he a basic se o goods o
a oid po e y o an enhanced collec ion o goods o achie e a ce ain quali y o li e abo e
and beyond he PL (PLSA 2016).
T adi ionally, ood (including wa e ), shel e , and clo hing a e men ioned as u gen
necessi ies (Den on 1990). In addi ion o ood, wa e , clo hing, and shel e , nume ous
Economies 2024,12, 328 4 o 18
mode n lis s emphasize he “basic needs” o anspo a ion, sani a ion, educa ion, and
heal hca e. The In e na ional Labou O ganiza ion (ILO) pu o h he mos commonly
acknowledged s a emen o necessi ies ha was widely dissemina ed ia he ILO book
Employmen , G ow h, and Basic Needs (Hoadley 1981).
The minimum income s anda d can be ep esen ed by he PL, commonly measu ed in
wo ways: absolu e and ela i e PLs. To be abo e he absolu e PL, a household o pe son
mus be able o acqui e o ul ill only he mos basic necessi ies, sus aining a minimum
le el o exis ence. The absolu e PL is de ined based on a pe son’s basic needs (Jolly 1976),
pa icula ly he cos o hese necessi ies (Wo ld Bank 2005). The baske o commodi ies
and se ices ha amilies can pu chase is used o iden i y poo indi iduals (Co ak 2006).
Simila ly, his can be used o iden i y he adequacy o he pension bene i .
The ela i e PL is based on he s anda d o li ing o a speci ic income dis ibu ion
and de ines he minimum s anda d o li ing as a pe cen age o he common s anda d o
li ing. This means he consump ion pa e n depends on socie y’s o a coun y’s s anda d
o li ing (OECD 2013;UNICEF 2005). Rela i e PLs a e es ablished based on he pe iod
and loca ion in which hey a e u ilized and he le el o li e. Eu opean s udies on po e y
o en ocus on sub-popula ions in socie y, e.g., he wo king popula ion (B ude e al. 2012)
o he elde ly. The EU indica o s o de e mining ela i e PLs a e 50% and 60% o median
income (Eu opean Commission 2011). The chosen s a egy has a c ucial impac on social
policy assessmen (Hagenaa s and P aag 1985). I includes de e mining he adequa e le el
o pension pay, as Ebbinghaus (2021) shows how di e en pension sys ems ac oss Eu ope
a ec po e y a es in he con inen . Simila ly, Jacques e al. (2021) compa ed he po e y
a es o he elde ly o he pe capi a public pension spending o 27 Eu opean coun ies. In
Aus alia, Saunde s and Wong (2011) showed how he Pension Re iew educed dep i a ion
among olde people a e Tan on e al. (2009) indica ed ha weaking he bene i s o olde
people li ing in couple households can conside ably educe he po e y a e.
The main goal o pension sys ems is o ensu e ha e i emen does no signi ican ly
decline ma e ial li ing s anda ds since he pe manen income heo y pos ula es ha people
canno jus adjus hei consump ion pa e ns and a e a ec ed by hei le els o consump-
ion be o e e i emen (Chybalski and Ma cinkiewicz 2016). The RR, he a io o e i emen
income o income be o e e i emen , is one s a is ic o his. A oiding a educ ion in ma e ial
li ing s anda ds in e i emen does no necessi a e a 100% RR because e i emen is linked
wi h, among o he hings, lowe expenses ela ing o a elling o wo k, lowe du able
consump ion, and no pension con ibu ions (Ande sen 2021). I should be emphasized
ha he RR is calcula ed based on ea nings. Pension co e age may also be measu ed in
e ms o pension weal h compa ed o income. Whe eas he RR ou lined abo e p o ides a
snapsho , pension weal h p o ides a s a is ic on o e all esou ces a ailable o e i emen .
The p esen alue o he p edic ed pension bene i low is pension weal h (Ande sen 2021).
The In e na ional Labou O ice Numbe C102—Social Secu i y (Minimum S anda ds)
Con en ion equi es he minimum eplacemen a e o be 40% o p e ious incomes a e
30 yea s o con ibu ions (In e na ional Labou O ice Numbe C102-Social Secu i y (Mini-
mum S anda ds) Con en ion 1952).
2.3. Consump ion Adjus men
Financial s abili y and consump ion smoo hing canno be sepa a ed om he adjus -
men p ocess ha people engage in due o hei changing incomes h oughou hei li es.
The e a e h ee main hypo heses o how people adjus hei pa e ns o consump ion—
absolu e income, ela i e income, and pe manen income. The absolu e income hypo hesis
e e s o Keynes’ consump ion unc ion. Consump ion is a s eady unc ion o cu en
disposable income (income a e axes). Duesenbe y (1949) de eloped he ela i e income
hypo hesis (RIH) by highligh ing he ele ance o in e dependen p e e ences and habi ual
beha io based on ela i e income. He con ended ha an indi idual’s consump ion deci-
sions a e impac ed by hei place in he household income dis ibu ion. This is suppo ed
by D akopoulos (2020), who showed ha an indi idual’s a e age p opensi y o consume
Economies 2024,12, 328 5 o 18
(APC) is a ec ed by hei place in he income dis ibu ion. Meanwhile, F iedman (1957)
p oposed he PIH. Acco dingly, he p ima y connec ion made by he PIH is ha pe manen
consump ion is p opo iona e o pe manen income, which co esponds o a gene ally
cons an APC. PIH is a heo y ha ies an indi idual’s consump ion a any poin in ime o
hei li e ime o al income (Aguia and Hu s 2008).
These consump ion pa e n hypo heses a e c ucial o assessing he adequacy o pen-
sion bene i s. Chybalski and Ma cinkiewicz (2016) a gue ha such an assessmen should
begin wi h asce aining he ocus o adequacy, whe he i is on income o consump ion
pa e ns, and hei smoo hing pa e n based on PIH is c ucial in connec ing hese wo
aspec s. They a gue ha he smoo hing pa e n is he basis o using he RR as an adequacy
measu e o pension bene i s as people al eady s a sa ing since hey know hei income
om pension bene i s will no be as high. Jedynak (2020) s a es ha one’s abili y o sa e
onesel is a iable due o di e en socioeconomic and demog aphic condi ions, as sug-
ges ed by RIH. Hence, pension gaps could be di e en in di e en socie ies. Fu he mo e,
S olle and S olle (2003) highligh ed he impo ance o heal h ac o s in de e mining his
adequacy. Howe e , we did no use heal h ac o s o assess he adequacy o CSP bene i s in
his a icle.
2.4. The Regional De elopmen Fac o s
The plan o hand o e he managemen o he CSP plan o he local go e nmen
may also a ec and be a ec ed by he le el o de elopmen in a dis ic . Based on he PI
hypo hesis, Pa k and Hewings (2007) a gue ha his a angemen may a ec he p opensi y
o olde people o s ay in he labo o ce o main ain he same le el o consump ion. The
decision ega ding he CSP plan may also a ec he mig a ion pa e n be ween dis ic s.
This in u n will a ec he le el o demand and wages in his a ea. Pa k and Hewings
(2007) concluded ha an inc ease in he age o e i emen can imp o e he a e age wel a e
o an a ea. Ne e heless, Önde and Schlunk (2019) poin ou ha al hough he decision on
pension paymen s can go e n he decision o mig a e, he cos o li ing, local ameni ies,
and p ope y alues also play an impo an ole.
Regional condi ions may also a ec he numbe o bene i s in e i emen . The age
s uc u e o a popula ion and he li ing s anda d in he a ea will a ec he le els o bene i s,
and in he case o sa ing-based e i emen income, he inancial decision is o en a ec ed
by he cul u al and social ac o s in he a ea (Bu ge 2014). The gende ac o and how
long an indi idual has wo ked in an occupa ion may also a ec he spa ial pa e n o
e i emen income, especially be ween he ci y and u ban a eas (Vidya ama e al. 2013).
Regional ac o s will also play a ole when he local go e nmen manages he CSP, gi en
ha di e en dis ic s ha e di e en iscal capaci ies. They can e en play a ole when he
CSP is paid by he cen al go e nmen , as he CSP plan is based on he sala ies o ci il
se an s, who a e con olled by he local go e nmen (Vidya ama 2021). Ba abyal and
Nijkamp (2017) also no e ha he expec a ions in an a ea may a ec he pa e n o sa ing,
which adds o o e en de e mines he pension sys em ha can be applied.
3. Resea ch Me hods
Al hough he main analysis is based on in e iews, i is necessa y o ha e o he
h esholds o analyze he s a emen s in he in e iew u he . To assess whe he he pension
bene i om he cu en p og am is adequa e o a ce ain egion, such as Kapuas Regency,
he i s me hodology applied in his s udy was o compa e he bene i s ecei ed by a ious
ci il se an e i ees o he s anda d minimum o ul ill hei consump ion needs. This
was ca ied ou by using he local absolu e PL, he compa ible ela i e PL, and he RR o
he cu en income. While Indonesia has se he absolu e PL a he local le el, he ela i e
PL is a ely used. This a icle u ilizes egional minimum wages as a p oxy o he eason
discussed below. Following his discussion, we p o ide an analysis o hei adjus men
plans, i any. This will be pe o med by conduc ing in-dep h in e iews abou he adequacy
o he CSP p og am.
Economies 2024,12, 328 6 o 18
3.1. Adequacy Assessmen T eshold
In he adequacy analysis in his a icle, we used seconda y da a ob ained om Badan
Pusa S a is ik/The Cen al S a is ics Agency (BPS-S a is ics). To assess he adequacy o he
pension p og am, he bene i s we e compa ed o a ious h esholds, including he Indone-
sian PL. BPS S a is ics se s he o icial PL o Indonesia (P iebe 2017). The PL indica es he
minimum inancial needs equi ed o sa is y he necessi ies o li e (BPS-S a is ics Indonesia
2023b). BPS de e mines po e y using pe capi a consump ion expendi u e o co e basic
ood and non- ood needs based on da a om he Na ional Socioeconomic Su ey (Susenas)
conduc ed in Ma ch and Sep embe (P iebe 2017;BPS-S a is ics Indonesia 2023b).
The Ma ch Susenas co e ed 300,000 households and p o ided po e y igu es o
34 p o inces and 514 dis ic s/ci ies a he coun y le el, while he Sep embe Suse-
nas co e ed 75,000 households and p o ided igu es only a he p o ince le el (BPS-
S a is ics Indonesia 2023a). Da a we e collec ed h ough in e iews wi h membe s o
households selec ed as samples using a Consump ion and Expendi u e ques ionnai e
(BPS-S a is ics Indonesia 2023a).
As s a ed, he PL is classi ied in o wo ca ego ies: ood PL (FPL) and non- ood PL
(NFPL). The FPL is he absolu e ba e minimum o ood expendi u es, equaling 2100 kilo-
calo ies pe pe son pe day. The undamen al commodi ies bundle con ains 52 commodi ies
( ish, g ains, mea , ube s, eggs, milk, nu s, ege ables, ui , oils, a s, e c.). The Non-Food
PL (NFPL) is he absolu e bo om line o non- ood necessi ies such as housing, clo hing,
educa ion, and heal h ca e. The essen ial non- ood commodi y bundle includes 51 goods in
ci ies and 47 in u al egions (BPS-S a is ics Indonesia 2023a).
In Ma ch 2023, he Indonesian na ional PL was a ound IDR 550,000 (EUR 32.62) pe
pe son pe mon h, comp ising a ound 74% FPL and 26% NFPL. This is an inc ease o
9% om he p e ious yea . The p o incial PL o Cen al Kaliman an is highe han he
na ional one, a IDR 596,184 (EUR 35.36), which inc eased om IDR 548,816 (EUR 32.55)
in 2022, while he le el o Kapuas Regency was lowe han he na ional le el, a IDR
424,066 (EUR 25.15), in 2022. While he numbe o 2023 has no been published, we use
he es ima e based on he inc ease a he p o incial le el: IDR 460,667 (EUR 27.32). We also
need o conside he PL a he household le el, conside ing ha income may be used o
household consump ion. In 2023, he coe icien used by he Cen al Bu eau o S a is ics
was 4.71, b inging he household PL in Kapuas o IDR 2,169,741 (EUR 128.7) (BPS-S a is ics
Indonesia 2023a).
Ano he h eshold ha used o assess he adequacy o he bene i is he minimum wage
as a p oxy o he ela i e PL. Based on Indonesian cen al go e nmen egula ion numbe
51 issued in he yea 2023, he minimum wage was se such ha i was a leas highe han
he a e age consump ion expendi u e pe pe son. The e o e, he minimum wages ha e a
basis simila o ha o he ela i e PL. In 2022, he a e age expendi u e pe capi a in Kapuas
Regency was IDR 11,377,000 (EUR 674.84) pe yea o IDR 948,000 (EUR 56.23) a mon h.
Following he 9.35% inc ease a he na ional le el, he a e age consump ion expendi u e in
Kapuas Regency ess es ima ed o be IDR 1.04 million (EUR 61.69) pe pe son pe mon h
(BPS-S a is ics Indonesia 2023b). The 2023 minimum wage se o Kapuas Regency by he
Cen al Kaliman an p o incial go e nmen a IDR 3,261,700 (EUR 193.47) pe mon h ul ills
ha equi emen .
In addi ion, he minimum wage, as a ela i e PL, can also be seen as he p opo ion
o a e age income. In o ma ion on he a e age wage in Indonesia can be sou ced om
he Indonesian Labou Fo ce Su ey (Sake nas), which only co e s he income om he
o mal labo o ce. The p o incial go e nmen se s he minimum wage in Indonesia, and
he lowes minimum wage in Indonesia is in Cen al Ja a, amoun ing o IDR 1,958,169
(EUR 116.15) pe mon h. This is 65% o he a e age na ional income acco ding o Sake nas.
Ne e heless, he alue is 90% o he a e age income o Cen al Ja a p o ince. I is simila
o he minimum wage o Cen al Kaliman an, which is a ound 90% o he a e age wage in
he p o ince. The e o e, we can use he minimum wage o Kapuas Regency as a p oxy o
he ela i e PL.
Economies 2024,12, 328 7 o 18
The las assessmen measu e o pension bene i s is he RR o cu en income. To
analyze his, we need o unde s and he s uc u e o he income o sala y o ci il se an s.
This is because he sala y sys em o go e nmen employees in Indonesia uses a combina-
ion scale, wi h one scale gi ing he same sala y, known as he basic sala y, o employees
in he same ank ega dless o he ype o job o he le el o esponsibili y, while he o he
scale is de e mined based on an employee’s le el o esponsibili y and ype o job. The
anks/le els o Indonesian ci il se an s a e classi ied in o ou ca ego ies acco ding o
Go e nmen Regula ion Numbe 7 Yea 1977: le el I, om I/a o I/d; le el II, om II/a o
II/d; le el III, om III/a o III/d; and le el IV, om IV/a o IV/e.
The basic sala y in Indonesia is conside ed low and has been a gued o be he eason
o co up ion in he pas (Simanungkali 2013;Tjip ohe ijan o 2018). Simanungkali (2013)
a gued ha he basic sala y o ci il se an s o he lowes ank can only ul ill 54% o
needs o a amily consis ing o wo adul s and wo child en. Fu he mo e, Tjip ohe ijan o
(2018) showed ha he basic sala y scale is no as di e si ied ac oss anks as i is in he
p i a e sec o . The second scale is he a ious s anda dized allowances such as amily
allowances, s uc u al allowances (based on s uc u al posi ions), unc ional allowances
(based on unc ional allowances), and special allowances o ci il se an s wo king in
emo e a eas. Tjip ohe ijan o (2018) a gued ha his scale was delibe a ely made unequal,
wi h a la ge gap, especially o unc ional posi ions, o a ac alen ed candida es o ill
he oles and p e en co up ion, as people in special posi ions ha e a e mo e capable o
engaging in co up ac i i ies. In addi ion, he second scale also p o ides an oppo uni y
o ce ain depa men s and local go e nmen s o p o ide addi ional allowances o hei
o icials (Simanungkali 2013). O e all, he a e age sala ies o he public sec o in Indonesia
a e s ill highe han hose o he p i a e sec o bu only due o highe educa ion le els, as
he p i a e sec o wage le el is highe o each educa ion le el s a ing om a bachelo ’s
deg ee and abo e (Tjip ohe ijan o 2018).
3.2. Quali a i e Analysis (In e iew)
In his s udy, we pe o med quali a i e esea ch o de elop a heo y o ob ain in-dep h
in o ma ion abou a eal-li e si ua ion. This esea ch da ase was de i ed om p ima y
sou ces, speci ically in-dep h in e iews. In-dep h, semi-s uc u ed, open-ended in e iews
we e conduc ed in Kapuas Regency, Kaliman an Tengah (Cen al Kaliman an) p o ince,
Indonesia, o ga he quali a i e da a (see Figu e 1 o he loca ion).
Economies 2024, 12, 328 8 o 19
con iden iali y. I is also wo h no ing ha he esea che s a oided g oup discussions du -
ing he in e iews.
Figu e 1. The loca ion o he case s udy: Kapuas Regency.
The au ho s elec ed o use Kapuas Regency as a case s udy because i is no a big
egency and he li ing cos is he lowes compa ed o o he egencies in Cen al Kaliman-
an (BPS-S a is ics Indonesia 2023b). This egency also has a ela i ely low PL (see Table 1
below). This indica es ela i ely low p ices; hence, he li ing cos in he a ea wi h espec
o he PL in Indonesia was calcula ed based on a ce ain combina ion o goods and se -
ices, as discussed in Sec ion 3.1. This allowed us o ocus mo e on how he o me ci il
se an s adjus ed hei consump ion pa e ns o hei si ua ion a he han unde he con-
di ion ha he cos o li ing is ce ainly beyond hei means.
Table 1. Po e y line based on egency/ci y in Kaliman an Tengah (Cen al Kaliman an).
Regency/Ci y
Po e y Line Based on Regency/Ci y (Rupiah/Capi a/Mon h)
2020 2021 2022 2022
IDR EUR IDR EUR IDR EUR
Ko awa ingin Ba a 397,883 23.60 418,388 24.82 476,297 28.25
Ko awa ingin Timu 446,039 26.46 467,551 27.73 510,290 30.27
Kapuas 332,999 19.75 345,272 20.48 424,066 25.15
Ba i o Sela an 433,787 25.73 450,706 26.73 481,352 28.55
Ba i o U a a 504,430 29.92 525,236 31.16 563,393 33.42
Sukama a 522,601 31.00 568,578 33.73 619,116 36.72
Lamandau 479,514 28.44 539,744 32.02 588,591 34.91
Se uyan 504,264 29.91 529,892 31.43 571,049 33.87
Ka ingan 474,056 28.12 498,487 29.57 553,082 32.81
Pulang Pisau 395,989 23.49 411,258 24.39 454,933 26.99
Gunung Mas 438,881 26.03 456,984 27.11 479,550 28.45
Ba i o Timu 517,183 30.68 534,896 31.73 571,786 33.92
Mu ung Raya 492,693 29.22 510,939 30.31 550,105 32.63
Palangka Raya 435,008 25.80 456,276 27.06 485,800 28.82
Kaliman an Tengah 485,635 28.81 506,982 30.07 548,816 32.55
Sou ce: BPS-S a is ics o Eas Ko awa ingin. Ga is Kemiskinan Menu u Kabupa en/Ko a (Ru-
piah/Kapi a/Bulan), 2020–2022.
In addi ion, his egency was also chosen o his case s udy because i has a p opo -
ion o ci il se an s ela i ely simila o ha o he popula ion a he na ional le el. In
Figu e 1. The loca ion o he case s udy: Kapuas Regency.
Fi een explo a o y, semi-s uc u ed in e iews we e conduc ed o help disco e and
desc ibe he di e si y o hough s and a i udes o pensione s abou he adequacy o CSP
plans. The au ho s chose he e i ees based on hei g ades and la es posi ions be o e
e i ing. A o al o 15 in e iewees we e e alua ed, in ol ing 5 emales and 10 males.
Two in e iewees co esponded o le el II, i e in e iewe s co esponded o le el III, and
Economies 2024,12, 328 8 o 18
eigh in e iewees co esponded o le el IV. The in e iew me hodology and ools we e
clea ed by he E hics Commi ee on Social S udies and Humani ies Na ional Resea ch and
Inno a ion Agency (NRIA) wi h clea ance le e numbe : 213/KE.01/SK/03/2024.
This pe sonal in e iew echnique allowed o he co e age o signi ican opics (ac-
co ding o he pu pose o his s udy) h oughou each in e iew and a s uc u e in which
esponden s could o e ex a in o ma ion and desc ip ions ega ding he phenomena o
in e es . The au ho s con ac ed eligible pensione s and encou aged hem o pa icipa e in
his s udy. An in e iew p o ocol was employed. Assu ances we e made ega ding e hical
conduc and he aking o measu es o p ese e in e iewee anonymi y and con iden iali y.
I is also wo h no ing ha he esea che s a oided g oup discussions du ing he in e iews.
The au ho s elec ed o use Kapuas Regency as a case s udy because i is no a big
egency and he li ing cos is he lowes compa ed o o he egencies in Cen al Kaliman an
(BPS-S a is ics Indonesia 2023b). This egency also has a ela i ely low PL (see Table 1
below). This indica es ela i ely low p ices; hence, he li ing cos in he a ea wi h espec o
he PL in Indonesia was calcula ed based on a ce ain combina ion o goods and se ices,
as discussed in Sec ion 3.1. This allowed us o ocus mo e on how he o me ci il se an s
adjus ed hei consump ion pa e ns o hei si ua ion a he han unde he condi ion ha
he cos o li ing is ce ainly beyond hei means.
Table 1. Po e y line based on egency/ci y in Kaliman an Tengah (Cen al Kaliman an).
Regency/Ci y
Po e y Line Based on Regency/Ci y (Rupiah/Capi a/Mon h)
2020 2021 2022 2022
IDR EUR IDR EUR IDR EUR
Ko awa ingin Ba a 397,883 23.60 418,388 24.82 476,297 28.25
Ko awa ingin Timu 446,039 26.46 467,551 27.73 510,290 30.27
Kapuas 332,999 19.75 345,272 20.48 424,066 25.15
Ba i o Sela an 433,787 25.73 450,706 26.73 481,352 28.55
Ba i o U a a 504,430 29.92 525,236 31.16 563,393 33.42
Sukama a 522,601 31.00 568,578 33.73 619,116 36.72
Lamandau 479,514 28.44 539,744 32.02 588,591 34.91
Se uyan 504,264 29.91 529,892 31.43 571,049 33.87
Ka ingan 474,056 28.12 498,487 29.57 553,082 32.81
Pulang Pisau 395,989 23.49 411,258 24.39 454,933 26.99
Gunung Mas 438,881 26.03 456,984 27.11 479,550 28.45
Ba i o Timu 517,183 30.68 534,896 31.73 571,786 33.92
Mu ung Raya 492,693 29.22 510,939 30.31 550,105 32.63
Palangka Raya 435,008 25.80 456,276 27.06 485,800 28.82
Kaliman an Tengah 485,635 28.81 506,982 30.07 548,816 32.55
Sou ce: BPS-S a is ics o Eas Ko awa ingin. Ga is Kemiskinan Menu u Kabupa en/Ko a (Rupiah/Kapi a/
Bulan), 2020–2022.
In addi ion, his egency was also chosen o his case s udy because i has a p opo ion
o ci il se an s ela i ely simila o ha o he popula ion a he na ional le el. In 2022, he
numbe o ci il se an s in he Local Go e nmen o Kapuas Regency was 5684, wi h 71.52%
holding uni e si y deg ees (BPS-S a is ics o Kapuas Regency 2023). Acco ding o he
Na ional Ci il Se ice Agency (2023), he numbe o ci il se an s in he local go e nmen
o Kapuas Regency in Oc obe 2023 was 5070 pe sons. Meanwhile, he popula ion o
Kapuas Regency in 2022 was 416.2 housand people. The e o e, he p opo ion o ci il
se an s in he popula ion o Kapuas Regency in 2022 is 1.36%.
In compa ison, he p opo ion o local, bo h p o incial and dis ic , go e nmen
o icials in Indonesia is 1.4%. Acco ding o BPS-S a is ics Indonesia (2023b), he numbe
o ci il se an s in Indonesia in 2022 was 3,890,579 pe sons, and acco ding o Na ional
Ci il Se ice Agency (2023), he numbe o ci il se an s in Indonesia in Oc obe 2023, as
desc ibed in Table 2, was 3,765,010 pe sons. Meanwhile, he popula ion o Indonesia in
Economies 2024,12, 328 15 o 18
Since pension sys ems should p o ide pensione s wi h an adequa e income ega dless
o he s a e o he economy, swi ching o au oma ic p ice indexa ion o paymen s would p o-
ec pensione s’ pu chasing powe . In addi ion, aising he e i emen age would enhance
he inancial sus ainabili y o he plan since mo e ci il se an s would be con ibu ing
o he sys em, and he pension budge s would be educed because pensione s would
ecei e bene i s o a sho e pe iod. Un il now, he e i emen age has emained 58, while
Indonesian li e expec ancy has inc eased by 1.09 yea s, ising om 67.2 yea s in 2000 o
68.3 yea s in 2021, acco ding o he WHO (Wo ld Heal h O ganiza ion Da a 2021). The e-
o e, conside ing he cu en li e expec ancy o Indonesians, he go e nmen should aise
he minimum pension age.
5. Conclusions
The pension sys em o ci il se an s in Indonesia is designed o help hem mee
he equi emen s o a decen li ing du ing e i emen and se e as a ewa d o he
se ices hey ha e p o ided. The cu en pension sys em p o ides an income ha allows a
easonable RR based on he ILO s anda ds. Ne e heless, he p oblem is he sala y i sel ;
hence, he a e age income in he egency is oo low o allow he pensione s o sa e, and
he le el a ies. Due o he low RRs o he in e iewees’ pension bene i s, mos o he
in e iewees canno mee pensione s’ inancial needs.
Ci il se an s co esponding o le els I and II gene ally ind i ha de o sa e in he
wo kplace and mo e challenging o achie e adequa e le els and a e mo e elian on he
s a e’s income le el h ough he bene i s o he CSP plans. Meanwhile, pensione s a he
highes le el (IV/e) migh ha e a “com o able” li ing s anda d when wo king. Howe e ,
his g oup o pensione s will ind i di icul o enjoy a simila s anda d o li ing du ing
e i emen since hey will ha e a low RR. They will be unable o main ain hei s anda ds
o li ing a e e i emen .
All he in e iewees’ pension bene i s we e o e he PL in Kapuas Regency. Un-
o una ely, some o he in e iewees may become impo e ished i hey eloca e o o he
egencies in Cen al Kaliman an o elsewhe e in Indonesia, while pensione s co esponding
o le el I who li e in o he egencies in Cen al Kaliman an and h oughou Indonesia migh
ha e o li e in po e y. This is one ac o ha has a ec ed he lack o in en ion o mig a e
among he in e iewees, in addi ion o homeowne ship, amily, and job oppo uni ies.
All he in e iewees belie ed hei pensions could co e hei basic needs, bu only
a ew belie ed hey could co e ad anced needs. Mos in e iewees said i only co e ed
25% o hei o al expendi u es; he e o e, pensione s may equi e o he sou ces o income
o supplemen hei e i emen income, such as wo king o a p i a e company. The
adjus men o lack o i o some shows ha his beha io canno be iden i ied wi h
only one income hypo hesis. Mos o he in e iewees we e willing o adjus based on
hei e i emen incomes (co esponding o he absolu e income hypo hesis), while some
in ended o smoo h hei consump ion by sa ing o inding ano he sou ce o income a e
e i emen (PIH). The RIH is also adhe ed o, as he de ini ion o basic consump ion is
impac ed by he pensione s’ p e ious places in he household income dis ibu ion. O he
issues may also hampe his adjus men , such as ha ing an exis ing loan, s ill ca ing o a
amily home, o being unable o ob ain homeowne ship while s ill wo king. This a icle’s
indings a e es ic ed o Kapuas Regency. Fu u e s udies along hese lines will he e o e be
needed ac oss Indonesia, pa icula ly in o he egencies ha di e om Kapuas Regency
in ce ain aspec s.
We should de e mine he adequacy o CSP based on he si ua ion in Kapuas Regency
and o he loca ions (cons i u ing he goal o a u u e s udy). This will allow us o conside
he op ion o inc easing adequacy wi hou isking he sus ainabili y o he CSP sys em
h ough simula ion. We would hus know how much o a pension bene i would be
su icien o mee he objec i es o he pension sys em; hence, pensione s would no all
in o po e y. Pension e o ms should be implemen ed in addi ion o inc easing pension
bene i s since hey migh o se he ise in go e nmen expenses. The e o e, pa ame ic
Economies 2024,12, 328 16 o 18
e o ms such as inc easing he con ibu ion a e, shi ing o au oma ic p ice indexa ion o
bene i s, and g adually aising he e i emen age a e sugges ed. This esea ch will help
policymake s p o ide be e pension bene i s while main aining sus ainabili y.
Au ho Con ibu ions: Concep ualiza ion, A.H. and Y.V.; me hodology, A.H., Y.V. and P.E.; so wa e,
A.H.; alida ion, A.H., Y.V. and B.B.; o mal analysis, A.H. and Y.V.; in es iga ion, A.H. and B.B.;
esou ces, A.H., Y.V. and B.B.; da a cu a ion, A.H. and Y.V.; w i ing—o iginal d a p epa a ion, A.H.
and Y.V.; w i ing— e iew and edi ing, A.H., Y.V. and P.E.; isualiza ion, A.H. and Y.V.; supe ision,
Y.V. and P.E.; p ojec adminis a ion, A.H. and B.B.; unding acquisi ion, A.H., Y.V. and P.E. All au ho s
ha e ead and ag eed o he published e sion o he manusc ip .
Funding: This esea ch ecei ed no ex e nal unding and he APC was unded by Hunga ian
Uni e si y o Ag icul u e and Li e Sciences.
Ins i u ional Re iew Boa d S a emen : The s udy was conduc ed in acco dance wi h he Decla a ion
o Helsinki, and app o ed by he Ins i u ional Re iew Boa d (o E hics Commi ee) o Ke ua Komisi
E ik Bidang Sosial Humani a BRIN (p o ocol code 213/KE.01/SK/03/2024 and 13 Ma ch 2024 o
app o al) o s udies in ol ing humans.
In o med Consen S a emen : W i en in o med consen has been ob ained om he in e iewee(s)
o publish his pape .
Da a A ailabili y S a emen : The da a was ob ained om Badan Pusa S a is ik/The Cen al S a is ics
Agency (BPS-S a is ics). h ps://www.bps.go.id/id/p ess elease (accessed on 12 Decembe 2023).
Con lic s o In e es : The au ho s decla e no con lic o in e es .
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