In Malaysia, nearly 70% of the population is today of working age. This is a demographic windfall that few countries have experienced at this scale. But data published in 2022 by the National Transfer Accounts (NTA) program shows something that the employment rate alone does not reveal: this generation of workers simultaneously finances the children it is raising and the parents it will have to support, and the window during which these two burdens remain manageable is closing at a speed that public policies have not yet integrated.
Indonesia has gone further. Its NTA accounts published in 2024 document, year of age by year of age, the exact moment when an individual shifts from net producer to net beneficiary. For those over 61 years old, this lifecycle deficit is now quantified, dated, and worsened with each update. It is Japan twenty years ago, viewed with instruments that Japan did not have.
The essentials
- In Malaysia, 70% of the population is of working age according to NTA 2022, but the pressure on workers intensifies as the share of those over 60 increases.
- In Indonesia, NTA 2024 documents a lifecycle deficit for those over 61, foreshadowing a budgetary shock at an indeterminate horizon in the coming decades.
- The NTA tool, developed since the 1990s by a team of researchers coordinated by Ronald Lee (Berkeley) and Andrew Mason (Hawaii), is now deployed in more than 80 countries.
- European debate on pensions suffers from an absence of comparable measurement at the sub-annual level; NTA offers an exportable method.
- The open question: will governments that now have these data use them to reform before being forced to do so by markets or by demographics itself?
What NTA measures, and why it matters differently
Most demographic debates rest on dependency ratios: how many elderly per how many workers. This is useful. It is also crude.
National Transfer Accounts do something else. They measure, for each year of age, how much an individual produces in labor and capital, how much they consume in goods, services, health and education, and how the gap between the two is filled: by personal savings, by private family transfers, or by public mechanisms like pensions, health insurance, state-funded education. The difference between what an individual produces and what they consume at a given age is called the lifecycle deficit. It is negative in childhood, positive in adulthood, negative again in old age. NTA traces its exact curve.
This level of precision changes the nature of the diagnosis. A dependency ratio tells how many heads are in each column. NTA tells how much money circulates between them, through which channels, and at what point the channels become saturated.
The tool is not new. Ronald Lee at Berkeley and Andrew Mason at Hawaii began formalizing it in the 1990s. But it took time to export. For two decades, it remained the preserve of a few academic teams. Today, more than 80 countries have produced NTA accounts, including several from Southeast Asia. Malaysia and Indonesia are among the few to have produced recent series with sufficient granularity to directly feed public decision-making.
Malaysia halfway between bonus and bill
Malaysia is in a paradoxical position. It still benefits from what demographers call the demographic dividend: a predominantly working population, with declining child burdens and still-contained elderly burdens. The 2022 NTA documents this window. But they also document its closure.
Malaysia’s fertility rate has fallen to around 1.7 children per woman, according to data from Malaysia’s Department of Statistics. Below the replacement threshold for several years. The share of those over 60 remains for now moderate, around 11-12%, but it is growing. UN demographic projections place Malaysia at 20-25% of population aged over 60 by 2050. This is the threshold beyond which public intergenerational transfers begin to structurally weigh on growth, as the Japanese case has documented.
What the 2022 NTA reveals with precision is that the pressure will not come from a sudden rupture but from silent accumulation. Malaysian workers today finance both ends of the pyramid: pediatric education and health on one side, family transfers to parents on the other. In a country where public social protection remains partially developed, much of these transfers flows through the direct family, not through the state. NTA allows measurement of this private flow, which escapes classical national accounting.
This is precisely where the tool changes political stakes. When a Malaysian minister discusses pension system reform, NTA gives them an answer that dependency ratios cannot provide: not only how much aging costs, but at what age, financed by whom, through what mechanism. This transforms a question of perception into a question of calibration.
In Indonesia, the deficit documented decade by decade
Indonesia published its 2024 NTA with unprecedented precision for a country of 280 million inhabitants. What emerges for those over 61 is striking: not only do these individuals consume more than they produce, which is expected, but the documented deficit is worsening compared to previous editions of the accounts. The aging of a cohort between two measurements is enough to shift the numbers.
Indonesia has long been presented as the symbol of the late Asian demographic dividend: a young population, sustained labor force growth, intact catch-up potential. This image is not false. It is incomplete. The 2024 NTA adds trajectory to it. Indonesia’s fertility rate has fallen from more than 5 children per woman in the 1970s to about 2.1 today, according to UN data. This rapid drop in the number of children will mechanically inflate the relative share of the elderly in the coming decades.
The Indonesian case illustrates what demographers call accelerated transition: a country that has not had time to build the social protection institutions that Europe took a century to erect before its demographic profile tips. France built its pension system in the 1940s-1970s, when its old-age dependency ratio was still low. Indonesia will face a structurally similar challenge with a much shorter horizon and a social insurance system still under construction, with the BPJS Ketenagakerjaan program covering a growing but incomplete share of the formal workforce.
This is not a reason for catastrophism. It is a reason for precision. And NTA provides exactly the missing precision.
The Japanese mirror: a twenty-year head start to prepare
Japan offers a case study that the Indonesian NTA allows us to read retrospectively. In 2004, the country had 19.5% of its population aged over 65. Twenty years later, this figure exceeds 29%, according to Japan’s National Bureau of Statistics. The budgetary shock that followed, both for the pension system, for health insurance and for the labor market, is documented: Japanese public debt exceeds 250% of GDP, and a significant portion of this trajectory is linked to age-related spending.
What the 2024 Indonesian NTA shows is that Indonesia today presents a profile that echoes, in broad strokes, what Japan was going through in the early years of the century: a documented lifecycle deficit for the oldest cohorts, still manageable at the aggregate level, but with a speed of deterioration that leaves little margin. The potentially decisive difference is that Indonesia has the NTA tool while Japan did not have it at this granularity at the time of its transition.
Having this tool early enough, with the data to calibrate the trajectory, is not a guarantee of better policy. But it is a necessary condition. The urgency lies not in demographics alone: it lies in the gap between what the data makes visible and what institutions choose to do with it. On the question of why states delay allocating resources where needs are documented, recent work on allocation biases in public and private capital provides complementary insight.
The Japanese lesson is not that aging is inevitably catastrophic. It is that it is manageable if transfer systems are adapted before being forced to adapt. Japan undertook pension system reforms in 2004, 2012, and 2020. They cushioned the shock without eliminating it. Indonesia may have the opportunity to reform under better conditions, if the political window is seized.
What Europe can learn from Asian accounting
Europe has debated pensions for twenty years. It does not lack data. It lacks data at the right level of precision.
The actuarial systems currently guiding pension reforms in France, Germany or Italy work on aggregates: life expectancy at 60, average replacement rate, contributor-to-pensioner ratio. These aggregates are useful for balancing accounts ten years out. They say little about how actual intergenerational transfers occur, or the speed at which certain cohorts shift into structural deficit.
NTA fills precisely this blind spot. Several European countries have moreover produced their own NTA accounts: Spain, Austria, Slovenia, Finland, among others. But this data remains largely confined to the academic sphere. It has not yet fed parliamentary debates on pension reform with the same centrality as classical actuarial projections.
The irony is that France, which experienced one of the most contentious debates of its recent history in 2023 over the retirement age, has the National Institute of Demographic Studies (INED) and an active NTA research team. The data exists. The link between academic production and political deliberation remains to be built.
This is where the Malaysian and Indonesian examples are instructive, not as models to import, but as method. These two countries have not solved their demographic problem. They have produced an instrument that makes the problem legible with precision. And legibility is the condition of serious deliberation.
The question of fertility, which runs through both European and Asian demographic debate, takes on different weight when read through NTA. As UN teams have documented, the decline in births is often not a choice but material renunciation: the costs of education and housing discourage young adults who would want to have children. NTA makes this mechanism legible in the figures, showing at what precise age education costs weigh on workers and to what extent they are offset by public transfers or left to households.
Reforming with data, not after facts
The NTA tool is not a political solution. It is a diagnostic instrument. The distinction matters.
NTA allows identification of three levers that Malaysian and Indonesian decision-makers now have at their disposal. The first is the coverage of social protection systems: if private intrafamily transfers carry a disproportionate share of lifecycle deficits for the elderly, it is because public systems do not cover enough. The data shows where and for whom. The second is the timing of reforms: the documented deterioration of the deficit for those over 61 in Indonesia gives a precise temporal trajectory. Reforms that start now have a different effect than those that start under constraint. The third is generational distribution: NTA allows measurement of whether a reform places its burden on cohorts least able to absorb it, or whether it can be calibrated to distribute effort differently.
These three questions arise in Europe identically. The contribution of NTA to the quality of demographic debate is not theoretical. It is concrete and available. Academic teams exist in most countries. Data can be produced at marginal cost in statistical systems that already collect the necessary information.
The real question is not whether NTA is a good tool. The academic literature on the subject, abundant since the work of Lee and Mason, is sufficiently convergent to settle it. The question is whether countries that now have it will mobilize it in public debate before being forced to do so by bond markets or by demographics itself.
Indonesia has a window of action. It is short. It is also far more than Japan had when it began measuring its own problem with this precision.
Sources
- The Jakarta Post / NTA Project — “What National Transfer Accounts reveal about aging future” (May 29, 2026): https://www.thejakartapost.com/opinion/2026/05/29/what-national-transfer-accounts-reveal-about-aging-future.html
- NTA Project (University of Hawaii / UC Berkeley) — international database of national transfer accounts: https://ntaccounts.org
- Malaysia Department of Statistics — demographic indicators 2022
- UN, Population Division — World Population Prospects 2024: https://population.un.org/wpp/
- Japan National Bureau of Statistics — population aging data 2024
- BPJS Ketenagakerjaan — 2023 annual report on Indonesian social insurance program coverage
- DOSM – Current Population Estimates 2024 (Malaysia): https://www.dosm.gov.my/portal-main/release-content/current-population-estimates-2024
- DOSM – National Transfer Accounts Malaysia 2022: https://www.dosm.gov.my/portal-main/release-content/national-transfer-accounts-malaysia-2022
- BPS-Statistics Indonesia – NTA 2024: https://www.bps.go.id/en/publication/2026/04/30/65ac6d4d948f2d3dd0967e58/national-transfer-accounts–nta–2024–the-portrait-of-intergenerational-economy-in-indonesia.html
- DOSM – Vital Statistics Malaysia 2023: https://www.dosm.gov.my/portal-main/release-content/vital-statistics-malaysia-2023
- FRED St. Louis Fed – Japan population 65+ (World Bank data): https://fred.stlouisfed.org/series/SPPOP65UPTOZSJPN
- Federal Reserve Bank of St. Louis – Why Is Japan’s Government Debt So High?: https://www.stlouisfed.org/on-the-economy/2025/apr/what-is-behind-japan-high-government-debt
- Andrew Mason – NTA Project (University of Hawaii): https://sites.google.com/hawaii.edu/andrew-mason/national-transfer-accounts
- DOSM MyAgeing Dashboard launch – The Star / Malay Mail: https://www.malaymail.com/news/malaysia/2024/09/06/dosm-malaysia-to-become-aged-nation-by-2040-with-population-over-60-set-to-surge/149508
- FRED St. Louis Fed – Indonesia Fertility Rate (World Bank): https://fred.stlouisfed.org/series/SPDYNTFRTINIDN