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      Pension and Active Ageing: Lessons Learned from Civil Servants in Indonesia

      , , , ,
      Social Sciences
      MDPI AG

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          Abstract

          Many developing countries are currently facing an ageing population without sufficient preparation for old-age financial adequacy, an important component in active ageing. One question is whether a pension system can create old-age financial adequacy. At the same time, many countries are shifting their pension systems from a defined benefit to a defined contribution pension system to improve the welfare of older people while maintaining state budget sustainability. Indonesia is not an exception. This paper learns from civil servants in Indonesia, where the retirement payout from the existing pay-as-you-go, defined benefit system is meagre. The system is to be transformed into a defined contribution one. Using a simulation method, this paper examines whether the proposed system will provide a better retirement payout, which is higher than the minimum wage and will allow retirees to maintain their pre-retirement income. This paper concludes that the proposed system alone is not sufficient to create old-age financial adequacy and, therefore, is less able to contribute to active ageing. To improve the retirement payout, among other things, the retirement age should be raised and made optional, and the accumulated savings should be re-invested during the retirement period.

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          Most cited references27

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          Active and successful aging: a European policy perspective.

          Over the past two decades, "active aging" has emerged in Europe as the foremost policy response to the challenges of population aging. This article examines the concept of active aging and how it differs from that of "successful aging." In particular, it shows how active aging presents a more holistic, life course-oriented approach than successful aging. We provide a critical perspective on active aging too by, first, tracing its emergence in Europe and then showing how, in practice, it has been dominated by a narrow economic or productivist perspective that prioritizes the extension of working life. It has also been gender blind. Nonetheless, it is argued that an active aging approach has the potential to enable countries to respond successfully to the challenges of population aging because of its comprehensive focus and emphasis on societal as well as individual responsibility. Finally, we set out the basic principles that need to be followed if the full potential of active aging is to be achieved.
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            Active Ageing, Pensions and Retirement in the UK

            The ageing population has led to increasing concerns about pensions and their future sustainability. Much of the dominant policy discourse around ageing and pension provision over the last decade has focussed on postponing retirement and prolonging employment. These measures are central to productive notions of ‘active ageing’. Initially the paper briefly sets out the pension developments in the UK. Then it introduces active ageing and active ageing policy, exploring its implications for UK pension provision. It demonstrates that a more comprehensive active ageing framework, which incorporates a life-course perspective, has the potential to assist the UK to respond to the challenges of an ageing population. In doing so it needs to highlight older people as an economic and social resource, and reduce barriers to older people’s participation in society.
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              Retirement plans and active ageing: perspectives in three countries

              This study explores whether the plans of older workers on the cusp of retirement are in line with the active ageing agenda set by policy makers in Europe. The study was carried out in Italy, England, and the United States of America (USA). A total of 133 older workers who planned to retire within the next 10–12 months were interviewed (55 in England, 40 in Italy and 38 in the USA) between May 2014 and early 2015 using common semi-structured questions. Active Ageing Index dimensions were used to gauge the orientation of older people towards their retirement. The results of the study suggest that, with some differences, retirement plans of interviewees were substantially consistent with the active ageing perspective. However, some challenges were highlighted, including the need for governments to do more to promote genuine freedom of choice in relation to leaving the labour market, and to provide greater support for informal family carers. Findings also pointed to the need to measure active ageing in connection with individual wellbeing, e.g. by including indicators of leisure activities and by considering the re-weighting of employment and informal care dimensions. Companies could also provide more support during the retirement transition, with opportunities for maintained social connection with former colleagues, and help in making and fulfilling retirement plans.
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                Author and article information

                Journal
                Social Sciences
                Social Sciences
                MDPI AG
                2076-0760
                November 2021
                November 15 2021
                : 10
                : 11
                : 436
                Article
                10.3390/socsci10110436
                c93f94bd-2a67-4df4-8465-f7306d17fe13
                © 2021

                https://creativecommons.org/licenses/by/4.0/

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