NSF aims to provide sustainable pensions for all
The National Savings Fund (NSF) targets a 10-year return of at least 3% for long-term investment in order to provide fund members with sustainable pensions.
The voluntary retirement savings fund targets informal workers, and currently holds investments totalling 8 billion baht.
Since its inauguration in August 2015, the NSF has registered an average return of 3%, with last year's return at 4.4%, said NSF secretary-general Jaruluck Ruengsuwan.
Year-to-date return is 1.6% because of the current domestic and international economic slowdown, she said.
To provide NSF members with sustainable pensions that are sufficient for their retirement, as required by law, the average 10-year return of the fund must not fall below 3%, said Ms Jaruluck.
Of Thailand's 37-million-strong labour workforce, around 16 million are covered by funds related to retirement savings, such as the Social Security Fund, provident funds and Government Pension Fund.
The remaining 21 million are classified as informal workers who are not covered by any retirement savings fund.
The NSF has 2.4 million members.
The NSF invests 80% of its portfolio in highly accredited fixed-income securities.
The law permits up to 20% of total investments to be invested in high-risk assets, such as equity.
However, the NSF's board of directors has a mandate to allow only 7% of total investments to be used for high-risk assets.
The NSF currently has no investments in the equity asset class. According to Ms Jaruluck, this is because the fund does not want to take risks in a stock market marred by financial volatility.
As the NSF remains small in size, a fund manager has not been hired to manage its investment portfolio.
It is managed by its board members.
By cooperating with the Education Ministry on campaigning, the NSF plans to encourage at least 1 million secondary school students aged 15 and older to become members in 2021.
Government contributions to the NSF are divided into three age ranges: those aged 15 to 30, for whom the government contribution is capped at 50% of cumulative savings and no more than 600 baht; those aged 30 to 50, with government contribution capped at 80% and no more than 960 baht; and those aged over 50, with government contribution capped at 100% and no more than 1,200 baht.
NSF members must contribute a minimum of 50 baht per month to the fund, with the maximum amount capped at 13,200 baht per year.