Bangkok, 3 July 2020 – The SEC has proposed draft guidelines for amending the Provident Fund Act B.E. 2530 (1987) in accordance with the SEC Board’s resolution to enhance the role of provident funds (PVD) as an efficient tool for supporting long-term, retirement savings, creating a mechanism for members to choose an investment policy suitable for their goals, and promoting adequate post-retirement income for Thai workforce in alignment with the draft National Pension Fund Act.
SEC Secretary-General Ruenvadee
Suwanmongkol said: “By 2021, Thailand will have become a full-scale aging
society with the elderly population accounting for 20 percent of the total population.
Yet, most of today’s documented workforce are unlikely to earn adequate income after
retirement. Given this landscape, retirement savings has become a part of the
national agenda stated in the 20-Year National Strategy, the 12th
National Economic and Social Development Plan and the Capital Market
Development Plan. Currently, PVD is a major source of savings to support
employees’ post-retirement living. Unfortunately, there are only 3 million PVD
members, accounting for 20 percent of the total documented employees in the
private sector.* Moreover, only 24 percent of the total
PVD members are likely to earn retirement savings more than the minimum estimate
of 3 million baht**.”
The SEC has therefore proposed guidelines
for amending the Provident Fund Act B.E. 2530 (1987) to increase PVD
efficiency in supporting employees’ retirement well-being and creating adequate
income for the documented workforce after retirement. The SEC Board Meeting No.
9/2563 passed a resolution on 4 June 2020, approving in principle the proposed
guidelines which cover four major areas, as follows:
(1) To support current PVD employers in
signing up employees for PVD membership automatically unless opting out;
(2) To promote a mechanism for PVD to automatically choose a suitable investment
policy for members who do not make a choice by themselves by taking into
consideration such members’ characteristics such as age and risk
tolerance;
(3) To enhance PVD efficiency by improving member protection mechanism to
ensure fair treatment whereby the qualifications, roles and responsibilities of
the Fund Committee must be clearly specified, members’ savings sufficiency must
be notified through post-retirement savings forecast, and standards of
regulations and PVD registration must be specified, to reduce private sector
burdens and increase savings flexibility for members, and;
(4) To develop PVD in support of the draft National Pension Fund Act,
which prescribes a compulsory pension fund for the documented workforce in the
private sector.
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Notes:
* As of December
2019, the Ministry of Finance and the Ministry of Labour.
** Based on the 2018 Study on Minimum Savings for Basic
Quality of Life of Retirees (the Elderly) by the Faculty of Management
Sciences, Kasetsart University, Sriracha Campus, and the Faculty of Commerce
and Accountancy, Chulalongkorn University, the minimum savings amount upon retirement
is 3 million baht or 12,500 baht per month for 20 years.