Retirement pension fund running by 2010

Employees will need to save more to prepare themselves for retirement, the government has said.

From 2010, employees will have to send 3 per cent of their salary, plus another 3 per cent to be contributed by employers, to the National Pension Fund, which should be established by then.

In the first year after establishment, companies with 100 employees or more will be subject to the new law covering 5 million employees.

In the sixth year, corporations which have 10 to 99 employees will be affected, and in the 11th year every company must send the money to the National Pension Fund.

The fund will be established under a new law which is being drafted and expectฌed to be enacted in 2010. While state officials have the Government Pension Fund for their retirement, the National Pension Fund will be in addition to the current provident funds adopted by parts of the private sector.

The money, once contributed to the fund, cannot be withdrawn except in cases of death, disability or retirement of the employees. The contributions to the National Pension Fund will be mandatoฌry.

The current provident funds, which deduct at least 3 per cent of an employee’s salary, will be allowed to register separately as part of the National Pension Fund, while the amount above 3 per cent will remain in the provident funds, which the employees can receive after resignation or retirement from their companies.

The provident funds for which the contribution is less than 3 per cent must raise the contributions to 3 per cent and register as part of the National Pension Fund. Otherwise, they can maintain the existing provident funds, but send an additional 3 per cent of the salary to the National Pension Fund.

The National Pension Fund and the provident fund can be combined for investment, but the proportion of 3 per cent of the salary and another 3 per cent from the employers cannot be withdrawn before the retirement, disability and death of the employees.

The National Pension Fund will be managed by assetmanagement compaฌnies, which will be qualified by the Office of National Pension Fund.

Kannikar Ekpaopun, director of the Bureau of Savings and Investment Policy at the Finance Ministry, said that if employees received a salary less than Bt6,000, they were not obliged to contribute to the fund, but their employers still needed to send 3 per cent of the employees’ salary to the fund. If the employees received more than Bt40,000 in salary, the 3 percent deduction would be calculated from Bt40,000.

She said the government would like to help the 25.25 million employees who are not registered in the corporate system as well.The government expects to gain an average Bt25.674 billion a year in longterm savings in the five years after the fund has been established, and the employees will have a monthly income after retirement of 55 per cent of their last month’s salary. If the fund is not established, the employees will receive money only from the Social Security Office, which provides about 38 per cent of the final month’s salary.

Kannikar said that the Nation Pension Fund had to be established because the proportion of elderly people in Thailand would increase from 10.12 per cent last year to 18.21 per cent in 2025, causing the elderly dependency ratio to rise to 28.09 per cent from 15.7 per cent now.

“Last year the government allocated Bt10.58 billion of its budget to take care of 1.8 million elderly people from the total of 7.4 million in the country, and the budget will become bigger next year,” said Kannikar.

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