Retirement at Older Age: JHT, Tax and Financial Independence

On 30 October 2025, retirees in Jakarta such as Ali, a former garment worker, and Vitri, who took early retirement, described the process of cashing out their Jaminan Hari Tua (JHT) and the income‑tax deduction applied to the benefit. Both rely on JHT together with personal savings to meet daily expenses after retiring three years ago.

JHT is a compulsory savings scheme administered by BPJS Ketenagakerjaan, and claims can be filed online by submitting an e‑KTP, a participant card, and a Tax Identification Number (NPWP) when the withdrawal exceeds Rp50 million. The payout is subject to income‑tax withholding, which explains the tax deductions observed by Ali and Vitri. In 2024, only about 16 % of the workforce was covered by the new pension system, with 40 % participation among formal employees and less than 1 % among informal workers, while Indonesia’s elderly share is projected to reach 20.31 % of the population by 2045.

The government aims to raise pension fund assets to 60 % of Gross Domestic Product (GDP) by 2045 through the RPJPN 2025‑2045 plan and by improving financial literacy for informal workers. Expanding JHT and pension coverage is expected to lower the current 84.75 % share of retirees who remain employed, mostly in the informal sector. Greater awareness of JHT taxation and streamlined claim procedures are seen as essential for achieving financial independence among future retirees.