Companies with at least 100 employees that do not offer voluntary provident funds or whose contributions to the funds fall below the mandatory minimum of 3% should be prepared for higher costs, says the executive of a global multinational risk management, broking and advisory company.
Companies should brace themselves for the government's enforcement of the fund, said Prapassorn Chaikit, director of Willis Towers Watson Thailand.
The cabinet last year approved the long-awaited mandatory provident fund, which is to start in 2018, with the matching step-up contribution rate slated to start at 3%, rising to 10% from the 10th year.
"Companies should review their contribution structures as this could result in higher costs for companies that pay contribution rates of lower than 3%," Ms Prapassorn said. These companies should set budgets for the fund's enforcement to ensure that the new rule does not adversely impact them.
According to Willis Towers Watson Thailand's survey, the average market contribution rate is at 5%. Voluntary provident funds require employers to contribute 2-15% of an employee's salary on a monthly basis.
Akira Banno, Willis Towers Watson Thailand's benefits consultant, said small and medium-sized enterprises (SMEs) should be prepared for the first 4-6 years of the law's implementation.
"Mandatory provident funds can cost SME operators or help them retain existing staff and attract skilled workers," he said.