The Finance Ministry is reviving plans to establish the National Savings Fund (NSF).
This street vendor is among more than 1 million informal workers in Bangkok who need better protection under the social welfare system. PATIPAT JANTHONG
The policy reversal comes after the ministry managed to address the problem of high administrative costs in running the scheme by using the transaction channels of two state-owned banks to send contributions to the fund.
The ministry will use networks of the Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives (BAAC) as channels through which fund members can send contributions, said Kritsada Jinavijarana, director-general of the Fiscal Policy Office.
High administrative costs including transaction fees compared with the minimum monthly contributions from workers were an obstacle for the Finance Ministry pushing for the NSF.
Transaction fees are now five to 10 baht per transaction, while the minimum monthly contribution is expected to be 50 baht.
Mr Kritsada said using the networks of the GSB and the BAAC could also attract bank customers to become fund members.
Other state-run banks are also ready to be channels to send contributions from members to the fund, he said without elaborating on how much of the transaction
costs would be absorbed by the GSB and BAAC.
Mr Kritsada said Finance Minister Sommai Phasee initially supported the NSF as a boon to informal workers but needed to discuss the issue with Deputy Prime Minister MR Pridiyathorn Devakula before forwarding it to the cabinet.
A draft NSF bill that created a retirement safety net for self-employed workers who are not covered by the social security system or provident funds was approved by the Democrat Party coalition government.
The draft bill had the government provide an initial contribution of 1 billion baht.
The Yingluck Shinawatra government shelved the idea, saying the NSF overlapped with the Social Security Fund, which provides pensions for workers in the informal sector.
The bill allows workers in the informal sector aged 15-60 to join the NSF with a minimum monthly contribution of 50 baht and a maximum of 13,200 baht a year.
The government would contribute up to 50% of the savings but no more than 600 baht a year for workers aged 15-30, while it would contribute 100% of the savings up to 1,200 baht per year for those over the age of 50.
Members can earn a pension when they turn 60 and have enough contributions as required by the criteria.
Under Section 40 of the Social Security Fund Act, workers outside the formal system can join the fund, either paying a monthly contribution of 100 baht with the government contributing 30 baht or contributing 150 baht a month with the government contributing 50 baht to their account.
As Social Security Fund members, workers can enjoy different types of coverage such as welfare when earning less due to illness or disability, funds for funeral expenses or a lump sum on retirement when reaching 60.
Mr Kritsada said following the passage of the bill, the Finance Ministry would meet with the Labour Ministry to discuss the transfer of all 350,000 members of the Social Security Fund under Section 40 to the NSF.