The Social Security Office is gearing up to transfer more than 1 million pension scheme subscribers to a new National Savings Fund due to launch this month.
The NSF fund is designed to extend welfare benefits to informal workers such as street vendors and farmers, to ensure their financial security.
About three million informal workers are expected to sign up for the NSF during the first five years of the system.
SSO deputy secretary-general Kowit Sajjawiset said the office has prepared a royal decree to amend Section 40 of the Social Security Act. The proposed amendment will terminate existing pension schemes, following the government’s approval of the NSF in March.
Retirees currently receive varying allowances. Former civil servants get a government pension, while former company employees are entitled to a social security allowance. Those not under either system receive a small, state-sponsored old-age allowance of 800 to 1,000 baht a month, depending on their age.
According to Mr Kowit, 1,080,000 people will be affected by the termination of existing pension schemes. These include people who hold Social Security Fund packages 3, 4 and 5, since these packages also cover pension benefits.
Packages 1 and 2 do not cover pensions, only compensation payments when the subscribers are sick, disabled or dead.
Mr Kowit said the transfer to the NSF will go ahead once Finance Ministry legislation authorising the move comes into force.
This legislation will require SSF subscribers who want to transfer their pension scheme to the NSF or quit their existing package to make a formal request within 180 days.
Those who quit the package will receive their money back, including accumulative payments and the state's contribution.
Mr Kowit said anyone who does not want to transfer or quit will be allowed to keep their pension scheme money in the SSF. But people are being advised against this option.
"I recommend that pension package subscribers choose either to transfer or quit when the time comes. If they don't, the sum won’t increase because we won’t collect anymore cash and the state will no longer contribute," he said.
Mr Kowit admitted the benefits offered by the NSF are different to those offered by the SSF, urging subscribers to study the terms and conditions carefully.
State contributions will vary depending on the age of the members, he said.
For workers aged 15-30, Mr Kowit said the government will contribute up to 50% on savings, but not more than 600 baht a year. For workers aged 31-50, the figure will stand at 80%, but not more than 960 baht a year. For those over the age of 50, the state will contribute up to 100% on savings, but not more than 1,200 baht a year.
Earlier this year a large number of elderly people rushed to join pension plans under SSF Section 40. They were keen to join the plan because government said it would contribute 100% to subscribers’ payments. Subscribers to the plan now number more than 1 million.