Finance Ministry holds provident fund hearing
The Finance Ministry is conducting a public hearing on the mandatory provident fund, intending for it to be a savings reserve for employees nationwide.
The objective is to require companies with at least 100 employees to establish a mandatory provident fund within one year after the law comes into effect, said a Finance Ministry source who requested anonymity.
Once the law takes effect, every company must establish a fund within five years.
Under the draft law, employers and employees will each be required to contribute 3% of the employee's salary for the first three years to the fund before increasing to 5% during the fourth to the sixth years, 7% between the seventh and the ninth years, and 10% from the 10th year on, with a cap of 60,000 baht per month.
Employees with a monthly salary below 10,000 baht are not liable to make contributions, but employers are required to contribute.
The law would require those aged between 15 and 60 who are not provident fund members to become members of the mandatory provident fund.
The Fiscal Policy Office is open to hear opinions from related parties on the draft bill on its website until Aug 21.
The need for the law is formal workers have insufficient income after retirement, said the source.
Only government officials have adequate retirement income, at an average of 70% of income received before retirement, said the source.
Formal workers who send a portion of their monthly income to the Social Security Fund, such as private company employees, part-time employees of government agencies and government employees, have an average 19% of income after retirement, below the threshold of 50-60%, said the source.
These workers risk falling into poverty in old age if additional savings during their working years are not ensured, said the source.
"The basic pension system for employees remains insufficient to sustain their livelihood in retirement. There are also discrepancies between professions," said the source.
"Few voluntary retirement savings funds for private employees have been established and they do not cover every employee."