The Cabinet has approved the setting up of the National Pension Fund (NPF), a new mandatory retirement savings scheme for formal sector workers.
The NPF is a fund designed to complement existing voluntary pension arrangements and is intended to support a burgeoning ageing Thai population. The country will have an estimated one million more new retirees annually starting from 2023.
Government spokesperson Rachada Dhnadirek said the cabinet has approved in principle the idea of setting up the NPF, which would mandate all formal employees who are not members of other provident funds, including employees of government agencies and state enterprises, to save for their retirement.
Once the bill has been passed, both employees and employers would have to contribute to the NPF depending on their employment tenure. In years one-to-three, they would be required to contribute 3% of their salary, rising to 5% for years four-to-six and 7% for years seven-to-nine. After that, they would be required to contribute at least 7%.
Workers affected would be those between the ages of 15 and 60 and earning up to 60,000 baht (US$1,907) per month. However, if an employee earns less than 10,000 baht (US$318) per month, only the employer would have to make the contribution.
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In addition, employees who want to save more for their retirement can choose to contribute more to the fund with a cap at 30% of their salary, according to Bangkok Post.
Contributions are tax-exempt and the assets will be managed by private assets management companies, which will be required to obtain licences from the Securities and Exchange Commission of Thailand.
