ASSESSING ULTRA-MICRO DIGITAL PENSION FEASIBILITY FOR INFORMAL WORKERS: SIMULATION EVIDENCE WITH AI-ASSISTED CONTRIBUTIONS IN NTB INDONESIA

Kukuh Tondoyekti; Titin Windiasari

doi:10.59003/nhj.v5i7.1796

Authors

Kukuh Tondoyekti Universitas Islam Al-Azhar
Titin Windiasari Universitas Islam Al-Azhar

DOI:

https://doi.org/10.59003/nhj.v5i7.1796

Keywords:

digital pension, ultra-micro pension, informal workers, financial inclusion, artificial intelligence

Abstract

Informal workers dominate Indonesia’s labour market but remain largely excluded from formal pension systems due to low and volatile incomes, raising concerns about old-age income security. The central question addressed is whether an ultra-micro digital pension scheme can generate meaningful retirement benefits for low-income informal workers and whether artificial intelligence (AI) can enhance contribution effectiveness under income uncertainty. A simulation-based framework is employed using official income statistics, combining deterministic and Monte Carlo simulations over a 25-year accumulation period and a 15-year payout phase. Three contribution designs are evaluated: a fixed ultra-micro nominal contribution, a flexible income-based contribution equal to 3% of earnings, and an income-based scheme augmented by an AI-assisted top-up mechanism. Fixed nominal contributions produce limited replacement rates of around 8%, while income-based contributions increase replacement rates to approximately 15%. The integration of AI-assisted contribution optimisation further raises replacement rates to about 19–20% and shifts the distribution of outcomes upward, improving downside protection under income volatility. Although the resulting benefits remain below conventional adequacy benchmarks, the findings demonstrate that ultra-micro digital pensions are financially feasible as complementary retirement instruments and that AI-enabled contribution mechanisms add measurable value in highly informal, low-income labour market settings

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