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This presentation by Kusumaningtuti Soetiono was made at the High-level Global Symposium on Financial Education: Promoting Long-term Savings and Investments in Korea which explored policies and good practices for supporting long-term savings and investments through financial education and financial consumer protection. Find out more at http://www.oecd.org/daf/fin/financial-education/globalsymposiumonfinancialeducationforlong-termsavingsandinvestments.htm
Mrs. Kusumaningtuti S. SoetionoMember of Board Commissioners in Financial Education and Consumer Protection, IFSA
Seoul, 26 February 201404/08/2023 Seoul, 26 Februari 2014
2
Presentation Index
Challenges4
The Importance of Financial Education1
To Promote Long Term Savings3
Development of National Strategies2
2
3
Increased Life Expectancy at Birth
Problems in Pension Programs
Supports Financial Stability
Low level of Financial Education
Their coverage of a wider range of the population
THE IMPORTANCE OF FINANCIAL EDUCATION TO PROMOTE LONG TERM SAVINGS AND
INVESTMENT
Low level of Financial Inclusion
21 3 64 5
4
Development of National Strategies
Article 28Law No. 21 Year 2011
OJK is authorized in providing information and educating the public on the characteristics of financial services sector, services, and products
Mandate on Law No. 21 Year 2011
Launched by the President on the Nov,19 2013
Guidelines for financial authorithy, financial institutions and other stakeholders
National Strategy on
Financial Literacy
5
VIS
ION
PIL
LAR
TAR
GET
PR
INC
IPLE
Support the realization of well literate society and increase the use of financial products to improve the
welfare of the community.
Education and National
Campaign
Strengthening the
Infrastructure
Development of Products
and Services
Development of National Strategies
Well Literate Society
Professional Employee MSMEs
Housewives Students Pensioners
Collaborationw/
Stakeholders
6
Mandate on OJK Regulation No. 1/2013
Article 14 Para. 1
Article 14 Para. 2
Financial Institutions must conduct education in order to improve the consumers and/or community financial literacy.
Education programs must be prepared annually and reported to the Indonesia Financial Services Authority
Development of National Strategies
Refer to National
Strategy on Financial Literacy
7
Financial Education to Promote Long Term Savings and Invesments
Financial education to promote long term savings and investment is NOT for Elderly
It is important for individuals to take proactive role in saving for retirement
8
Financial Education to Promote Long Term Savings and Invesments
Content
Assessment Programs
Delivery Channel
Regulation
No such thing as a “one size fits all” financial education programme
Invesment Profile
Income Other
Based On
Programmes should create creative method to deliver material due to difference in level of education of target audiences.
Reach all groups, esp. vulnerable group
People know where to go for help
Consumer Protection also important for consumer well-being, because Financial Education may come too late
7%2%
Pension Fund
Literate
Usage
5 Principle
Baseline Financial Literacy Survey 2013
9
Dukungan
Reasuransi
Retensi
Sendiri
KEY CHALLEN
GES
Develop strong infrastructure among institutions
Challenges
Enhance the Coordination among
related institutions to have a structured
and continuous program
Assessment of the effectiveness of
financial education programmes and an
evaluation of what approaches have
worked well
Sustainability of financial education Programme
THANK YOU
Mrs. Kusumaningtuti S. SoetionoMember of Board Commissioners in Financial Education and Consumer Protection, IFSA
Telp : +62-21 2981-7002Fax : +62-21 350 1886Mobile : +62-811-922-942 Email : [email protected]
ATTACHMENT
12
The Importance (1)
Their Coverage of a wider range of the
population
Source : World Economic Forum, 2011
Increased Life Expectancy at Birth
13
The Importance (2)
Low Replacement RatesChanges in Pension
ArrangementNumber of Private Plans
Source : OECD, 2011
Share of Labor Force and Population Aged 15–64 Covered by Pension
Systems, 2007
Source : ADB, 2012
14
The Importance (3)
Low Level of Financial InclusionRespondent Without Loan and Savings in
Indonesia
Low Level of Financial Literacy
Source : World Bank, 2010
%
Age
15
The Importance (4)
As building blocks of the economy, the financial health of each household contributes to the financial health of the country as a whole
Financially Secure Households are the BACKBONE of a Strong Domestic Economy.
Relationship between Household Financial Stability and the Stability of the National Economy
Financially educated customers are more likely to have long term savings which will have positive effects on
economic growth
16
Pillar 2Strengthening the Infrastucture
Development of National Strategies
Increase the awareness, knowledge and skills about financial products and services
Changing the mindset and behavior of financial activities
Increase the usage of financial products and services
Strengthen and support the education and national campaign
Expand and facilitate access to financial information
Ensure the sustainability of financial literacy program
Pillar 2Strengthening the Infrastucture
Encourage Financial Institutions to develop products and services that best suit the needs of the community
Encourage Financial Institutions to improve the quality of services
Encourage Financial Institutions to expand the financial services area.
Pillar 3Development of Financial Products and Services
Education and National
Campaign
Strengthening the
Infrastructure
Development of Products
and Services
17
Market Capitalization(Billion US$)
Total Outstanding(Billion US$)
Long Term Savings and Invesments
Goverment Bond, Corporate Bond, Sukuk,
Asset Back Security
GDP 2013: USD 908,4 Billion* 1 US$ = RP10,000
18
Financial Education to Promote Long Term Savings and Invesments
(1)
Content
No such thing as a “one size fits all” financial education programme
BASED ON .....
Risk Tolerance Return Needs Time Horizon
Investment Profile
High Income Middle
Income Low Income
Their Income
Age Gender Culture
Other Characteristic
s
Financial Products and Services, Entrepreneurship and Consumer Protection
Financial Planning and Budget Discipline
19
Financial Education to Promote Long Term Savings and Invesments
(2)
Delivery Channel
Programmes should create creative method to deliver material due to difference in level of education of target
audiences.
Education Website
Social Media Lecture
Urban People
Financial Literacy Car
Adv: TV, Radio, Newsletter
Rural PeopleFinancial
Customer Care
System where customers can receive and give information, and filed a Complaints
20
Financial Education to Promote Long Term Savings and Invesments
(3)
Assessment Programs
Baseline Financial Literacy Survey 2013
Financial Literacy Survey conducted in 2013 was the largest literacy survey yet, comprising : 20 Provinces (from
Aceh to Jayapura) 8.000 Respondent
7%2%
Pension FundLiterate
Usage
Questionnaires
Every Programs
21
Financial Education to Promote Long Term Savings and Invesments
(4)
Regulation
Consumer Protection also important for consumer well-being
Because Financial Education may come too late
5 Principle
Transparency
Reliability
Data Privacy Protection
5
1
3
4Complaint Handling and Dispute Resolution
Fair Treatment2
HOWEVER ...
OJK Regulation No.1/2013 regarding Consumer Protection in Financial Services Sector
22
Dukungan
Reasuransi
Retensi
Sendiri
KEY CHALLEN
GES
Develop strong infrastructure among institutions
Gain Endorsement
Regulatory Framework
Sense of Ownership
Commitment
Challenges (1)
23
Enhance the Coordination among
related institutions to have a structured
and continuous program
Ministry/Govt. Inst.
University Financial
Institution and Association
Press NGO
Dukungan
Reasuransi
Retensi
Sendiri
KEY CHALLEN
GES
Challenges (2)
24
Dukungan
Reasuransi
Retensi
Sendiri
KEY CHALLEN
GESAssessment of the
effectiveness of financial education
programmes and an evaluation of what
approaches have worked well
Challenges (3)
Questionnaire Financial
Institution and other data
National Survey
25
Financial Literacy Board
Financial Literacy Unit
Sustainability Improvement
Dukungan
Reasuransi
Retensi
Sendiri
KEY CHALLEN
GESSustainability of financial education Programme
Challenges (4)
26
Looking Back the Survey
Literacy and Usage Level
27
Looking Back the Survey
Employment
Compare to other type of employment, housewives and informal workers demonstred the lowest literacy level.
Only 13% housewives are well literate while only 16% informal workers are well literate in banking sector.
28
Looking Back the Survey
About 46% people with total expenditure more than US$175/mth are well literate in banking sector and only 19% are well literate in capital market.
People with higher expenditure level has higher literacy index in all sector.
Expenditure Level
A : > US$ 175B : > US$ 125 - US$ 175C : > US$ 60 - US$ 125D : > US$ 40 - US$ 60E : < US$ 40
Expenditure per Capita per Month* 1USD = Rp10.000
29
More than 50% people graduated from universities are well literate in banking and insurance sector and 20 % are well literate in capital market.
In contrast, only 1% people with no education are well literate in all sector.
People with higher education level has higher literacy index in all sector.
Education Level
Looking Back the Survey
30
Only 19% women have knowledge, skill and behaviour compared to 25% men are well literate in banking sector
In all 6 sector, women are less literate compare to men.
Gender
Looking Back the Survey
31
Only 17% people above 50 years old are well literate in banking sector and only 7% are well literate in pension fund.
Young and elderly people has difficulties in financial matters or lower literacy index in all sector.
Age
Looking Back the Survey
32
Only 17% people living in rural area are well literate in banking sector and only 1% are well literate in capital market.
People living in urban area has higher literacy index in all sector.
Region
Looking Back the Survey
