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View all search resultsUnions push to scrap pension fund withdrawal tax
Labor organizations argue that taxing old-age benefits (JHT) withdrawals undermines the purpose of the social security program, particularly as workers face mounting layoff risks and rising living costs.
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President of the Labor Party Said Iqbal, who is also Presidential special advisor for manpower and labor affairs, speaks to the media as he arrives at the Presidential Palace for his inauguration in Jakarta on June 8, 2026. (Reuters/Willy Kurniawan)
T
he imposition of 5 percent tax on withdrawals from the old-age benefit (JHT) program has sparked growing opposition from labor groups, which argue the levy unfairly reduces workers' savings at a time when many are grappling with layoffs and rising living costs.
Presidential special adviser for labor and workers' welfare Said Iqbal has called on the government to abolish the tax, arguing that workers have already paid income tax on their wages before contributing to the social security scheme, which they can only access after being laid off or upon reaching retirement age.
"The Labor Party asks Finance Minister Purbaya [Yudhi Sadewa] to revoke taxes on the JHT, severance pay, holiday bonus [THR] and pension benefits," he said on Monday, as quoted by Kompas.
According to Said, the tax rate on JHT withdrawals should be zero because workers' salaries have already been subject to Article 21 income tax before contributions are made to the JHT and pension programs.
“[They have already paid income tax], then they contribute to the JHT and pension schemes. Taxing the benefits again amounts to double taxation," he said, adding that the Labor Party would formally propose the change to the government.
Other labor organizations have echoed the criticism, arguing that taxing JHT withdrawals undermines the purpose of the social security program, particularly as workers face mounting layoff risks and rising living costs.
"The JHT belongs to workers. It is money they have accumulated throughout their working lives to support themselves when they are no longer employed," Mirah Sumirat, president of the Indonesian Workers Union Association (ASPIRASI) said in a statement on Friday, as quoted by Kompas.
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