Jakarta. Indonesia is weighing whether imposing a 0% tax on retirement savings is necessary, as Finance Minister Purbaya Yudhi Sadewa wants to avoid benefiting the rich.

Jaminan Hari Tua or JHT is a government-mandated retirement savings program that will deduct a portion of one's monthly salary. The employer also contributes to these savings each month. According to Purbaya, JHT withdrawals of up to Rp 50 million or around $2,799 are already tax-free. However, Purbaya fears that making the entire program tax-free regardless of the withdrawal value will only backfire.

“For the sake of fairness, I suppose everyone has to pay. … What if [the 0% tax] will only benefit the rich?  So I will evaluate [whether such relaxation is needed],” Purbaya told reporters in Jakarta on Monday.

He admitted to not having received any letter from Said Iqbal, the newly appointed president’s advisor on workers’ welfare. Purbaya went on to say that the government will also take a look at how other countries handle their retirement savings.

“We will see what the existing regulations are like. We will compare them with global best practices in other countries. The [0% tax] policy depends on the results of our assessments,” Purbaya said.

Said had previously told the press that workers should not be subject to tax when withdrawing their retirement savings. He explained: “They already have to pay the income tax. That’s why I propose 0% tax on JHT.”

Under current rules, the government has imposed a tax starting at 5% for old-age fund withdrawals beyond Rp 50 million. The tax rate may even reach 35% if people wish to take out over Rp 5 billion (almost $280,000).