The number of provident fund (PVD) members has fallen below 3 million last year for the first time in three years, weighed down by a record drop of 5.2% in 2020, mainly due to many employees losing their jobs or receiving salary cuts due to the pandemic and economic recession.
Sittasri Nakasiri, director of the portfolio advice and provident fund supervision department of the Securities and Exchange Commission (SEC), said there was a huge withdrawal of funds from the PVD in 2020.
The economic slump caused by the pandemic was the main catalyst causing affected members to withdraw their shares in the PVD. Payouts from retirement and resignations stood at 73.7 billion baht in 2020, a rise of 47% from 2019. Of the total, 51.68 billion baht went to retired members and 22.02 billion baht to members who had left the fund but had not quit their jobs.
She said some PVD members who left the fund retired while some are still working. The proportion of members in the system employed in private firms fell to 18.8% in 2020 from 20.2% in 2019.
Over the past three years, the number of employers providing PVD has increased by 513 or 2.6% while 462 employers with a total of 18,736 employees under PVD coverage have requested a cancellation of the fund and related employee welfare along with business termination.
Meanwhile, 517 employers with 78,958 employees who have been battered by the pandemic have still chosen to retain PVD benefits for their workers. They also requested a reduction in the rate of savings during the period February to December last year.
"Withdrawing money out of PVD may put employees at risk of having insufficient savings for their retirement. PVD members who wish to leave the fund but do not quit their jobs must first carefully study the funds' conditions because many funds have restrictions against reinstatement," she said.
Thailand is transitioning from an aging society to a full-fledged aged society this year. Thai citizens aged 60 and over now account for over 20% of the total population, pushing the ratio between senior citizens and younger people to 1:5, she said.
"The population is living longer but retirement savings are low. The elderly cannot depend on income from their children as in the past. Everyone should save money for themselves."