Indonesian workers protest tax on retirement funds, one pays car's worth in tax

A progressive tax on Indonesia's Old Age Security (JHT) fund withdrawals has ignited public controversy, particularly after one individual shared their experience of paying a tax equivalent to the price of a new Daihatsu Sigra car.

The policy, which applies a progressive tax rate to retirement savings, has drawn criticism for impacting those who rely on these funds for their post-retirement income. The individual, who requested anonymity, expressed shock at the calculation, stating it "didn't make sense" and was "equivalent to one new Sigra car."

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But that's okay, the rules have been like that for a long time. As a tax-paying citizen, I accept it and must be sincere even though I was shocked because the calculation didn't make sense.

According to the individual, the tax was applied because they had partially withdrawn about 5% of their JHT in 2017. When they withdrew the remaining balance in 2023, after more than two years had passed, they were subjected to a "non-final tax with progressive tax calculation."

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I was charged a non-final tax with a progressive tax calculation, the value is equivalent to one new Sigra car.

While acknowledging their own lack of awareness regarding the rules, the individual lamented the tax on JHT funds, which are a vital lifeline for retirees. They urged the government to reconsider the progressive tax on JHT, suggesting its complete abolition. "Every month we obediently pay income tax. For the retirement fund, just abolish it because this is the mainstay for retirees to continue their lives," they stated.

The individual shared their story on social media to prevent others from making similar strategic errors when withdrawing their JHT funds.

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Even perhaps this retirement tax should be abolished. The reason is, every month we obediently pay income tax. For the retirement fund, just abolish it because this is the mainstay for retirees to continue their lives.