Peranan Program Pensiun dalam Tata Kehidupan Bangsa

1
The views expressed in this presentation are
those of the author and do not necessarily
reflect the views or policies of the Asian
Development Bank does not guarantee the accuracy
of the data presented.
The Best Choice between Several Pension Systems
MANGUN KADARISMAN
This presentation is delivered at the Asia and
Pacific Forum on Poverty Reforming Policies and
Institutions for Poverty Reduction, to be held at
the Asian Development Bank, Manila, 5-9 February
2001.
THE ASIA AND PACIFIC FORUM ON POVERTY
POLICY AND INSTITUTIONAL REFORMS FOR POVERTY
REDUCTION
2
THE BEST CHOICE between several PENSION SYSTEMS
( to avert Old Age Poverty in Developing
Countries )
1
IMPORTANT ROLE of a PENSION SYSTEM
2
COMPARISON of PENSION SYSTEMS
3
THE BEST CHOICE for DEVELOPING COUNTRIES
CHALLENGES to REFORM a NATIONAL PENSION
SYSTEM ( The Indonesion Case )
4
3
IMPORTANT ROLE of a PENSION SYSTEM
4
IMPORTANT ROLE of a PENSION SYSTEM
5. Maintening Sustainable Income for the old
1. Protect the shifting value of
life Agriculture gt Industrial
2. Smoothing Regeneration Process of the Nation
6. Part of the Social Safety Net
3. Promote Economic Development - Capital
mobilisation investment -Pulling down of
inflation increase - Promote Productivity
4. Accelerating Peaceful Industrial
Relation process
7. Averting Old age Poverty
5
PROTECT THE SHIFTING VALUE OF LIVE
( Agriculture to Industrial )
6
TRANSISION VALUE OF LIFE
Nomadic population getering hanting
Industrial Era ( modern )
Agriculture Era (tradisional)
U R B A N I S A T I O N G L O B A L I S A T I
O N
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SUMMARY
1. IN TRADISIONAL AGRICULTURE COMMUNITY,
PENSION HAS NO MEANING, BECAUSE THE
CHILDREN ARE RES- PONSABLE TO TAKE CARE THE
PARENTS. 2. IN MODERN INDUSTRIALIZE COMMUNITY,
PENSION SYS- TEM IS A BASIC NEED, AS SPECIALY FOR
THE OLD, IN ORDER NOT TO BURDEN THE CHILDREN. 3.
PENSION SYSTEM QUARANTY THE SHIFTING VALUE OF
LIFE FROM AGRICULTURE TO INDUSTRIAL COMMUNITY.

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SMOOTHING REGENERATION PROCESS OF THE NATION
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POPULATION OVER SIXTY YEARS OLD IN INDONESIA
1997 ( in thousand )
SENIORS (60 YEAR ) 6.447,2
7.323,2 13.770,4
YOUNIORS 49.036,6
50.839.3
99.875,9 (20-59year)
CHILDERN 44.387,4
42.789,3 87.176,7 (0
-19year)
GRAND TOTAL 99,871,2
100.951,8 200.823,-
10
NUMBER OF YEARS REQUIRED TO DOUBLE THE SHARE
OF POPULATION OVER 60 YEAR, from 9 to 18 ( in
circles )
145
95
57
47
36
30
24
Notes 1. Year in wich population doubling was
or will be reach is shown ini parenthes ( --- )
2. Sources World Bank.
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PERCENTAGE OF POPULATION OVER SIXTY YEARS OLD (
selected Countries ) (60 YEARS )
OPTIMAL age 60 year plus Total of /- 31
NOTES 1. Organization for Economic Cooperation
and Development (OECD)
Australia, Austria, Belgium, Canada, Denmark,
Finland, France,"Germany, Greece,
Iceland, Ireland,Italy, Japan, Luxemburg,
Netherlands, New Zealand, Norway, Portugal,
Spain, Swedn, Switzerland,
Turkey, United Kingdom, United States.
2. LAC Latin American Carabian.
3. Data in weighted average percentage
4. Source World Bank.
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PERCEPTION concerning THREE GENERATION
AGRICULTURE PERCEPTION (tradisional)
INDUSTRIAL PERCEPTION (modern)
Nuclear Family is the smallest Social unit in a
Nation
Nuclear Famiky is the smallest social unit in a
Nation. A Nation is an Integrated system
of Nuclear families
1
Extended Family, consist of - Parents -
Children Grand Children
A Nation consist of - Seniors / Elderly ( 60
years plus ) - Yuniors / Young ( 20 - 59 year old
) - Children ( old lt 20 year )
2
Family Responsibility Yuniors taking care there
own Parents
National Responsibility National Pension System
protect every member. Every body become a member
of Sosial Security Plan ( compulsary )
3
Yuniors respect there own parents. (possibly not
respect to other eldery?? )
Yuniors respect all seniors / elderly included
there own parents
4
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AGRICULTURE PERCEPTION
Vertical Responsibility
INDUSTRIAL PERCEPTION
Seniors (gt60Yr)
Multi Demensional Responsibility
Junors (20-60Yr)
Children (lt20Yr)
STRUCTURED PERCEPTION CONCERNING THREE GENERATION
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FENOMENON OBSTACLES in REGENERATION PROCESS
1. GENERATION GAP
ALL GENERATION get the same opportunity (every
body have a job )
2. GENERATION PRESSURE
YOUNG GENERATION do not mine to get pres- sure
from the OLDER GENERATION
3. GENERATION CONFLICT
YOUNG GENERATION re-act with contra pres- sure to
the OLDER GENERATION
15
CONTINEOUS PROCESS of CONFLICTING GENERATION
?
IFF NO ACTION STOP THE PROCESSING CONFLICT, ANNY
TIME HAVE THE OPPORTUNITY TO EXPLODE
HOW TO MANAGE THE GROWING GENERATION CONFLICT ?
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TRANSFORMATION of the ELDERLY FUNCTION
ELDERLY / SENIORS
JOB
FULL TIME
NEEDS JOB
NEEDS JOB
NEEDS ACTIVITY
FORMAL
PART TIME
FULL TIME
NEEDS ACTIVITY
NEEDS ACTIVITY
NON FORMAL
PART TIME
NEEDS PROMOTION INSEMINATION
ACTIVITY
RELIGION SOCIAL HOBBY ETC.
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SUMMARY
1. OBSTACLES IN REGENERATION, PROCESSING IN THREE
STAGES A. Generation gap.
B. Generation pressure. C.
Generation conflict.. 2. TO AVOID REGENERATON
OBSTACLE, IT NEEDS TO SEEK FOR A.
Transformation of Elderly function from Job to
activity function B. Iff the
elderly still needs job, because he / she has no
/ not enough pension benefit,
then the job must not conflicting with the needs
of young genera- tion , or as
part timers 3. THE IDEAAL DECISSION, IS TO SEEK
FOR A. Adequate Financial support
through Integreted Nasional Pension System.
B. Maintening Appreciation System for the
Elderly C. Create new Job and
Activities.
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PROMOTE ECONOMIC DEVELOPMENT
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DIMENSION OF THE HUMAN DEVELOPMENT
( Huyck Hoyer, 1985 )
PERSONALITY SOSIAL SYSTEM
0 20
40 60
80 100
WISDOM
0 20
40 60
80 100
COGNITIVE SYSTEM
0 20
40 60
80 100
CENSORY SYSTEM
0 20
40 60
80 100
BIOLOGICAL SYSTEM
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THE HUMAN LIFE CYCLE
AGING PROCESS
30Yr
40Yr
60Yr
PSYCHOLOGICAL DISORDER
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THE MOST PRODUTIVE ACTIVITYin theAGING PROCESS
EDUCATION PRODUCTIVE
ECONOMY PRODUCTIVE
SOCIAL PRODUCTIVE
-THE MOST PRODUCTIVE ACTIVITY FOR THE ELDERLY ,
IS SOCIAL ACTIVITY -THEREFORE ELDERLY HAVE TO BE
MOTIVATED FOR FUNCIONAL TRANSFORMATION FROM
WORK FUNCTION TO ACTIVITY FUNCTION, IN ADDITIONAL
TO FINANCIAL SUPPORT.
22
ECONOMIC DEVELOPMENT PATTERN
HUMAN RESOURCE
PRODUCTION SERVICES INSTITUTION
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WORK FORCE versus WORK OPPORTUNITY
I. WORK FORCE WORK OPPORTUNITY


WORK OPPORTUNITY
II. WORK FORCE gt WORK OPPORTUNITY
WORK OPPORTUNITY
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EFFORT of BALANCINGWORK FORCE AND WORK
OPPORTUNITY

• 1. CREATE NEW WORK OPPORTUNITY TO OVERCOME
• A. Unemployed Work force
• B. Growth of new work seekers
• 2. CREATE NEW WORK OPPRTUNITY for retired workers
  who needs job,
• but not conflicting with the needs of
  young workers.
• 3. SLOW DOWN THE GROWTH OF WORK FORCE
• A. Intensify Family Planning
• B. Promote opportunities of
  activities, wich is not inferior by workfield.
• C. Stengthenen the Financial Support
  System for Elderly such as
• PENSION SYSTEM
• D. Create REWARD SYSTEM for ELDERLY,
  in order to motivate the
• role of Elderly as voluntiers.
• 4. PROMOTE GLOBAL WORK OPPORTUNITIES.

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SOCIAL INSTITUTION
HUMAN DEVELOPMENT
S T U C T U R E I N F R A S T R U C T U R E
SOSIAL development
D I S C O U N T F A C I L I T I E S
AKTIVITY
HUMAN RESOURCES
ECONOMIC development
PENSION SYSTEM
WORK
PRODUCTION SERVICES INSTITUTION
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FLOW of FUNDS TAXES
PENSION FUND (fund manager) -MOBILISATION -INVEST
MENT -PENSION BENEFIT PAYMENT -TAX PAYMENT
30 Yr
20 Yr
PROPERTIES
DIRECT INVESTMENT
CAPITAL MARKET -STOCK -BONDS ETC.
NON CAPITAL MARKET -FIXED DEPOSIT -MUTUAL
FUNDS -CP, ETC.
TAX PAYMENT FROM EMITEN BENEFISRY
TAX PAYMENT to the GOVERNMENT
SUMMARY - MOBILISATION of FUND
- PARTISIPATION IN MANAGING THE INFLATION
RATE - AT ITS TURN,
INCREASE GOVERNMENT TAX
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ACCELERATING PEACEFUL INDUSTRIAL RELATION PROCESS
28
CONCEPT PRODUCTIVITY IMPROVEMENT trough PEACEFUL
INDUSTRIAL RELATION
EXTERNAL
INTERNAL
- SENS OF BILONGING - SENS OF PARTISIPATION -
SELF CORRECTION
REDISTRIBUTION OF PROFIT
EVERY ONE HAPPY
PEACEFUL INDUSTIAL RELATION
29
PEACEFULL DOING BUSENISS
PEACEFULL DOING WORK
INCREASE PRODUCTIVITY
INCREASE LABOUR PROSPERITY VALUE
PEACEFULL INDUSTRIAL RELATION PIR
30
MAINTENING SUSTAINABLE INCOME FOR THE OLD
31
CONSEPTTOTAL MINIMUM INCOME


COST of LIFE
COST of LIFE FOR THE OLD DAYS
COST of LIFE FOR TO DAY
INCOME TO BE SAVED THROUGH PENSION PLAN AS MUCH
AS THE PRESENT VALUE OF THE PENSION BENEFIT


INCOME OVER THE POVERTY LINE
TOTAL MINIMUM INCOME


PENSION BENEFIT FOR THE OLD AGE
INCOME for DAILY LIFE
TOTAL MINIMUM INCOME
SUMMARY PENSION SYSTEM GUARANTY A SUSTAINABLE
INCOME IN THE OLD DAYS
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PART OF THE SOCIAL SAFETY NET
33
SOCIAL SAFETY NET, WITHOUT SUPPORT OF A NATIONAL
SOCIAL SECURITY PLAN LEAD TO EXTRA ORDINARY
ACTIVITIES WITH ALL CONSEQUENCIES RISK
34
SOCIAL SECURITY, PENSION PLAN SAVING PLAN AS AN
INTEGRATED PENSION SYSTEM, AND A PART OF THE
SOCIAL SAFETY NET AT THE FRONT LINE, WILL BE VERY
USEFUL TO MINIMIZE THE BURDEN OF THE SOCIAL
SAFETY NET AS A WHOLE.
EXSISTING SOSIAL SECURITY
REFORMED SOSIAL SECURITY
SAVING PLAN
PENSION PLAN
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AVERTING OLD AGE POVERTY
36
LIFE POLUTION BY POVERTY
CHILDREN NOT PRODUCTIVE
A SUCCESSFULL PENSION SYSTEM AVERT OLD AGE POVERTY
37
COMPARISION OF PENSION SYSTEMS
38
PROGRAM
DEFINED CONTRIBUTION
DEFINED BENEFIT
C0MPARISON
OBYECTIVE
LIFE ANUITY AT PENSIONABLE AGE
STRAIGHT LIFE ANUITY
ESTABLISHMENT
VOLUNTARY
VOLUNTARY
MEMBER CONTRIBUTION
CONSTANT ( AS AGREED )
CONSTANT ( AS AGREED )
COMPANY CONTRIBUTION
CONSTANT ( AS AGREED )
CHANGEABLE (AS ACTUARIAL CALCULATION)
PENSION BENEFIT
UN-DETERMINED
DETERMINED INITIALY
MANAGED BY
1. EMPLOYER PENSION FUND 2. FINANCIAL
INSTITUTION a. BANK b. INSURANCE
EMPLOYER PENSION FUND
RISK BEARER
MEMBERS
FOUNDER
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DEFINED CONTRIBUTION
DEFINED BENEFIT
(CONTINUATION )
INITIAL FUND
NONE
PAY IN ISTALMENT
CASH COLLECTION
POSSIBLE ( MEMBER CONTRIBUTION )
PROHIBITED ( 20 NPV AT EARKY PENSION )
FUND CONTROLE
INDIVIDUAL ADMINISTRATION INTENSIVE
GROUP ACTUARIAL INTENSIVE
ASSET
UN-IMITED
LIMITED (120 PAST SERVICE ) (LIABILITY)
ACTUARIST
UN-NECESSARY
ABSULITELY NECESSARY
PORTABILITY
FLEXIBLE
NOT FLEXIBLE
OTHER PENSION PROGRAM, CLASSIFIED AS DEFINED
CONTRIBUTION PLAN 1.
PENSION PROGRAM BASED ON PROFIT
2. DEFINED CONTRIBUTION WITH TARGETTED
BENEFIT ( HYBRIDA )
40
BASIC SOCIAL SECURITY DEFINED CONTRIBUTION ( as
in INDONESIA )
BASIC SOCIAL SECURITY DEFINED BENEFIT ( as in
DEVELOPED COUNTRIES )
RESERVE ( Individual Saving Plan ) ( layer 3 )
VOLUNTERY
VOLUNTERY
DC
DC
ADDITIONAL (Privet Pension Plan) ( layer 2 )
VOLUNTARY / COMPULSARY
DB
DC
DB
DC
VOLUNTERY
BASIC ( social Security ) (layer I)
COMPULSARY
COMPULSARY
DB
DC
I
II
III
IV
ALTERNATIVES PROGRAM CHOICE IN A SYSTEM
I. All layer not garanted
III. Layer 1 garanted by the Governmernt
II. Layer 2 garanted by the Employer
IV. Layer 1 garanted by the Government
Layer 2 garanted by the the Employer
Notes DC DEFINED CONTRIBUTION DB DEFINED
BENEFIT
SYSTEM COMPARISON
41
THE BEST CHOICE FOR DEVELOPING COUNTRIES
42
Notes DC Defined Contribution
DB Defined Benefit
THE BEST CHOICE for DEVELOPING COUNTRIES
ALTERNATIVES I
II III
IV
DC
DC
DC
DC
LAYER 3
DC
DB
DB
DC
LAYER 2
DB
LAYER 1
DC
DC
DB
FORCED CHOICE - NO GARANTY
CHILI ?
HARD CHOICE- GARANTED BY THE EMPLOYER
- HARD COMPETITION
BEST CHOICE ( for Developing Countries ) -
GARANTED BY THE GOVERNMENT - FLEXIBILITY OF
CONTRIBUTION PORTABILITY - EMPLOYER HAVE MORE
CHANCE FOR GLOBAL COMPETITION - LABOURS HAVE MORE
CHANCE FOR INDIVIDUAL SAVING.
BEST OF THE BEST CHOICE ( for Developed
Countries )
- GARANTED BY
EMPLOYER GOVERNMENT
43
CHALLENGES TO REFORM A NATIONAL PENSION SYSTEM
( the Indonesian case )
44
PRINCIPLES of SOCIAL SECURITY REFORM ( Indonesian
Case )
EXISTING
PROPOSE REFORM
Profit motive Institution covered by a special
corporate law The Govern- ment as the only one
share holder.
Non Provit Institution covered by a Trust law.
Publik Institution
1
Board of Suppervisers are Government Officials
Tri partid Board of Suppervisors a.Publik b.
Employer c. Government
2
Limited compulsary membership ( large proups only
).
Total integrated compulsary member- ship ( groups
, individuals, formal informal sectors )
3
Cotribution by employers workers ( two partid
cooperation )
Contribution by employers, workers Government.
( Tri partid coopera- tion )
4
Risk takers are the workers him self.
Risk taker have to be the Government as the last
funding resources.
5
45
PRINCIPLES of SOCIAL SECURITY REFORM ( Indonesian
Case )( continue )
EXISTING
PROPOSE REFORM
Monopolistic function. Less transparant.
Decentralize function. Transparancy is a must.
6
Reluctant feeling to increase benefit.
Always trying to increase benefit.
7
Investment Coporate income are taxable. Reckless
investment policy.
Investment corporate income are not
taxable. Prudent investment policy.
8
Death Health insurance cover only working time.
Death Health Insurance cover whole life time.
9
Defined Contribution Pension Plan ( like
ordinaire saving plan )
Defined Benefit Pension Plan or other Plan
clasified as Defined Benefit Plan ( defined
cotribution with defined mini- mum benefit
Hybrida Pension Plan )
10
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CHALLENGES TO REFORM A NATIONAL PENSION SYSTEM (
Indonesian Case )
1. Uncertain economic political will of the
GOVERNMENT. 2. Pension Culture is not widely
institusionalize yet. 3. Informal workers gtgtgtgt
Formal workers. 4. Deficulties to draw
contribution from Informal workers. 5. Workers
salaries is very low ( under valued ). 6. Fast
growing aging population ( /- 5 per annum to
day amount 17 million ) 7. Only 20 ( /- 4
million ) of the elderly people ( over 60 years )
are covered by a Pension Plan. 8. Large
amount of Indonesia population ( /- 201 million
) 9. Widely spreed population over 130000
Ilands , included new issues in autonomy of
Provinces. 10. Accumulated monetary financial
problems. 11. Social Security Reform have the
own challenges.
REFORM MUST BE DONE IMMEDIATELY, STARTING WITH A
COMPRHENSIVE STUDY
47
THE CHILEAN PRIVATE PENSION SYSTEM
1. ADMINISTERED by PRIVATE PENSION FUND
MANAGEMENT COMPANY 2. DEFINED CONTRIBUTION
SCHEME ( with minimum benefit ? Garanted by the
Government ? Hybrida Scheme ? ) 3. ROLE of THE
GOVERNMENT - rule maker supervisor - secondary
guarantor ( minimum profitability of each Fund,
subject to certain requirement ) - provider of
minimum pensions for those who do not reach the
required amount
CLASSIFIED AS DEFINED BENEFIT SCHEME
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BIOGRAPHY
Name Ir.
Kadarisman Mangun Sukarjo. MBA. Please date of
birth Bandung,, April 10, 1928. Merital
status Maried, with 1 wife 3
children 8 grand children. Educattion
1. University of Gajah Mada (
technical Fakulty ).
2. Institute for Management
Education and Development ( Master of Business
Administration ).
3. Bouw Centrum in Nederland (
Specialisation in Building Management ). Present
occupation 1. Founder Suppervisor of
Krakatau Steel Pension Fund ( KSPF ).
2. Chairman of
Krakatau Steel Retirement Society.
3. Founder Chairman
of The Advisory Board of Indonesian Pension Funds
Association ( IPFA ).
4. Member of The Board of Elderly
Welfare Insitution.
5. Member of The Board of Indonesian
Society of Gerontology.
6. Member of The Board of The
Indonesian Elderly Comunication Forum.
7. Lecturer on a.
Insitute for Management Education ( Universisty
of Indonesia )
b. Pension Fund
Menagement Education ( IPFA ) Pass occupation
( 1961 - 1978 ) Employee of PT.
Krakatau Steel ( PTKS ).
( 1978 - 1988 ) Industrial
Relation Director of PT KS.
( 1988 - 1993 ) Member of
The Board of Advisors of PTKS.
( 1981 - 1993 ) President
Director of Krakatau Steel Pension Fund.
( 1995 - 1999 )
Lecturer of Guna Darma University
Jakarta, January 10, 2000.