A long-awaited mandatory provident fund scheme will be on the cabinet's agenda tomorrow as part of efforts to provide a retirement safety net as the country's demographic trend keeps edging older.
The draft law requires companies with 100 employees or more to match employees' contributions to the fund within three years of its enforcement, said a source at the Finance Ministry.
Companies with at least 20 employees will have to offer the compulsory retirement savings scheme from the fifth year of implementation, and those with only one employee must contribute from the eighth year, the source said.
The draft has eased from recent proposals by the Fiscal Policy Office (FPO) that required firms with at least 100 workers to offer a mandatory provident fund scheme in the first year of implementation, companies with at least 10 employees from the fourth year and those with at least one employee from the sixth year.
Employers and workers will be obliged by law to contribute to the provident fund anywhere from 2-15% of salary, with a cap of 60,000 baht per month per worker. However, in the early stages the fund may require employees and employers to make a 3% contribution, the source said.
The contribution will be specified in an organic law, the source said, adding the rate will be increased in line with economic conditions to raise average retirement income in the next 15 years to 50% of the worker's final month salary, up from 30-40% at present.
Some 12 million employees are Social Security Fund (SSF) members, of which only 2.9 million are covered by voluntary provident fund schemes. The SSF also offers old-age pension benefits to its members.
Last year the government set up the National Savings Fund (NSF), a voluntary pension fund for 27 million informal workers, and allowed provident fund members to make higher contributions than their employers, with a cap of 15% of salary.
The state also offers a Government Pension Fund, a non-contribution pension for state officials and living allowance for elderly. Moreover, it wants to implement a reverse mortgage scheme that provides loans for the elderly by allowing them to convert their home equity into cash.
Krisada Chinavicharana, director-general of the FPO, said the draft bill is expected to come into force in 2018.
The size of the mandatory provident fund is expected to be at least 100 billion baht, the source said.