Financial Literacy and Structured Planning Are Keys to Civil Servants' Retirement Readiness

Natalia Sihombing S.Pd Kamis, Agustus 13, 2026
Illustration by AI
FORMOSA NEWS

Financial literacy and the courage to take on financial risks prove to be essential factors in determining the retirement readiness of Indonesian civil servants (PNS). This was revealed by a team of researchers from the Faculty of Economics and Business at Universitas Negeri Jakarta—Jenny Pardede, Umi Widyastuti, and I Gusti Ketut Agung Ulupui—through a quantitative study involving 208 employees from Institution X in Indonesia. Published in the International Journal of Management Analytics in July 2026, this study is crucial for addressing the challenges of post-career financial adequacy amid rising inflation and healthcare costs.

Although public sector employees are covered by formal pension schemes, these benefits are frequently insufficient to maintain pre-retirement living standards. External factors such as inflation and escalating healthcare expenses can gradually erode the purchasing power of pension incomes. Meanwhile, individual financial comprehension and risk tolerance levels vary significantly. Without proactive management, employees risk experiencing a decline in financial well-being after leaving the workforce.

To investigate this, the study employed a quantitative approach by distributing a digital questionnaire via Google Forms to 208 active respondents. The collected data was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4 software to test both direct relationships and the mediating roles among the variables.

Data analysis results indicate several key findings:

  • Financial literacy significantly affects financial risk tolerance ($H1$), retirement planning ($H2$), and retirement readiness directly ($H5$).
  • Financial risk tolerance significantly influences retirement planning behavior ($H3$).
  • Retirement planning proves to significantly improve retirement readiness ($H4$).
  • Retirement planning acts as a significant mediating variable between financial literacy and risk tolerance toward retirement readiness ($H6$ and $H7$).

These findings confirm that institutional pension protection alone is insufficient without adequate financial knowledge. Financial understanding and comfort levels regarding market risk must be channeled into concrete actions through structured retirement planning. Therefore, government institutions are advised to strengthen financial education programs, retirement planning workshops, and ongoing counseling services throughout employees' careers rather than limiting preparation to the final pre-retirement stage.

“Improving financial literacy and structured retirement planning is essential to strengthen civil servants' retirement preparedness,” stated Jenny Pardede along with the research team from Universitas Negeri Jakarta.

Author Profile:

  • Jenny Pardede: Lead and corresponding author, Master of Management student at the Faculty of Economics and Business, Universitas Negeri Jakarta, Indonesia, focusing on finance and strategic management.
  • Umi Widyastuti: Researcher and faculty member at the Faculty of Economics and Business, Universitas Negeri Jakarta, Indonesia, specializing in financial management and consumer behavior.
  • I Gusti Ketut Agung Ulupui: Researcher and faculty member at the Faculty of Economics and Business, Universitas Negeri Jakarta, Indonesia, specializing in accounting and public finance.

Research Source:

Natalia Sihombing S.Pd

Diposting oleh Natalia Sihombing S.Pd

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