Presidential Adviser Says Tax-Free JHT Withdrawals Could Boost Domestic Consumption
The Special Advisor to the President on Labour and Worker Welfare, Said Iqbal, stated that a zero per cent tax rate during the withdrawal of Old Age Security (JHT) funds has the potential to increase domestic consumption. He noted that current regulations need to be reviewed to reflect fairness and protection for workers.
“It has the potential to strengthen domestic consumption, which has long been one of the main pillars of national economic growth,” he said in a written statement on Friday, 3 July 2026.
He cited data from the Social Security Administering Body (BPJS) Ketenagakerjaan, which recorded that 95.45 per cent of JHT beneficiaries received zero per cent tax upon withdrawal. This incentive is granted because their JHT balances do not exceed Rp 50 million.
This percentage of claims was recorded from January to May 2026. Those receiving the incentive totalled 1,645,469 people out of 1,723,910 claims submitted.
From this figure, Iqbal believes the government is showing commitment to worker protection. “Therefore, I believe this policy should be further reviewed so that in the future, all beneficiaries receive the same treatment,” he said.
According to him, JHT is a worker’s savings accumulated from contributions during their period of employment. The accumulated funds are vital as a support for workers’ livelihoods during retirement or in the event of termination of employment.
Iqbal argued that tax exemptions on JHT withdrawals should not merely be viewed as a reduction in state revenue. He assessed that there are subsequent economic effects that must be considered, such as costs for education, healthcare, small business capital, and even home renovations.
“That economic activity will ultimately increase household consumption, strengthen public purchasing power, and drive economic growth,” he added.
Previously, a woman via the TikTok account @marthatobing8 complained about a JHT tax deduction amounting to Rp 15 million. Before retiring at age 56, she had withdrawn Rp 3.7 million from her balance. She criticised the deduction amount because, during the initial socialisation, it was not disclosed that progressive taxes would apply if withdrawals were made while still actively working.
The Head of the Bureau of Communication and Information Services at the Ministry of Finance, Deni Surjantoro, stated that JHT withdrawals while still employed will be subject to the general Individual Income Tax (PPh) rate. The regulation was designed to prevent participants from making early withdrawals and to ensure they receive maximum benefits.
Monthly JHT contributions are not subject to Income Tax. “Through this scheme, the state is present to provide justice, ease, and simplicity for the workers’ old age,” Deni said in a written statement on Tuesday, 30 June 2026.