Financing and Policy Strategies for Pensions in Indonesia

I 7. Financing of pensions (1) PAYG financing method Contribution rate will be annually increased annually. Preparing for aging beforehand, by levying higher contribution rates than PAYG cost rate and relying on investment return on the reserves as well as advance savings. (2) General average premium / contribution (GAP) method Constant contribution rate for a long period, sometimes assumed as forever. (3) Scaled premium / contribution (SP) method: Constant contribution rate (for a certain period) 20

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