Ministry to pay B63bn owed to fund

Ministry to pay B63bn owed to fund

The Finance Ministry is set to pay off 63.2 billion baht of unpaid contributions to the Social Security Fund if a bill on public finance comes into force, a senior ministry official says.

The move is aimed at settling the government's liabilities and making the next administration aware of the amount of debt they have to prevent them from spending too lavishly.

It also aims to make the next government comply with the bill on public finance objectives.

The 63.2 billion baht was unpaid from 2010-12. Employee representatives on the Social Security Fund's board called for the government to pay off the overdue amount because the government had not paid interest but the fund had lost investment opportunities from the unpaid contributions.

The Social Security Fund now has a combined contribution of 1.2 trillion baht from 13 million compulsory and voluntary members.

The draft bill on public finance is part of the ministry's effort to establish systems to monitor government expenditure and revenue and to prevent fiscal problems from future governments' implementation of populist policies.

The bill will require future governments to make four-year forecasts for public debt to assure fiscal sustainability. Even though there is a 60% public debt threshold, it is set by the ministry and is not backed by the law.

At present, the Public Debt Management Act sets a borrowing ceiling for the budget deficit at 20% of the annual budget plus 80% of principal repayment expenditure.

Borrowing for state enterprises must not exceed 20% of the annual budget. 

The government's liabilities for contributions to the pension system are set to rise because it will need to contribute to the National Savings Fund (NSF) in addition to the Social Security Fund.

The long-awaited NSF is expected to be set up in the coming months after the government recently approved its establishment. 

The government also approved a transfer of 2.5 million workers in the informal sector to the NSF under Section 40 of the Social Security Act.

Workers in the informal sector aged 15-60 will be allowed to join the NSF with a minimum monthly contribution of 50 baht and a maximum per year of 13,200 baht.

The government will contribute up to 50% of the savings but not more than 600 baht a year for workers aged 15-30, up to 80% but not more than 960 baht a year for workers aged 31-50 and up to 100% but not more than 1,200 baht a year for those over the age of 50. Members can earn a pension when they turn 60.

The NSF will have seed funding of 600 million baht. Less than 100 million will be used for office expenses and the rest reserved as government contributions.

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