The Government Pension Fund (GPF), the country's largest pension provider, has soothed concerns it may not have sufficient money for redemption if all its members who applied before 1997 decided to return to the previous non-contribution benefit plan.
The fund has prepared about 100 billion baht for those members who are qualified to opt out of member status, a Finance Ministry source said, adding that this amount was enough to pay them contributions plus benefits.
The reinstatement of the previous pension benefit plan will not negatively affect the GPF's financial position, said the source.
The National Council for Peace and Order will soon deliberate on a draft bill allowing civil servants who applied to become GPF members before March 27, 1997 to switch to the previous pension benefit plan. The non-contribution basis of the pension is expected to be enforced from Oct 1 if the draft wins the junta's approval.
As the cost of the benefits system ballooned, the GPF was set up in 1997 as an alternative. The pension system was gradually phased out, and the GPF became compulsory for all new officials.
The GPF functions like a provident fund for the public sector, with several benefit packages to choose from including monthly pensions and lump-sum payments, or a combination of both.
Officials in office at the time had the choice of sticking with the pension system or switching to the GPF, which promoted itself by promising a hefty return.
However, due to economic volatility over the years, the GPF failed to deliver its promised rate of return, sparking protests among officials who opted in.
The Yingluck Shinawatra government agreed in April 2013 to let this group of officials — some 300,000 incumbent officials and retirees who became GPF members before March 27, 1997 — to switch back to the pension system.
The source believes only some of those eligible to use the previous non-contribution pension plan will opt out of GPF membership.
The GPF has 11.8 million members including 9.77 million who were fund members before March 27, 1997 and combined assets of 600 billion baht.
Officials with at least 38 years of service are likely to opt out of GPF membership, as the other plan would be better.