A man pushes a cart at Talat Phlu, in Bangkok. The government is mulling increasing contribution limits to the National Savings Fund, a retirement safety net for self-employed workers. (Photo by Patipat Janthong)
The Fiscal Policy Office (FPO) has floated the idea of lifting the ceiling for the government’s matching contributions to the National Savings Fund (NSF) to 1,500 baht a year for each member.
It has also suggested additional state contributions to welfare and subsidy recipients who join the fund.
The proposals are aimed at attracting more self-employed workers to become NSF members. Membership is expected to hit 1 million this year.
If the higher ceiling is approved, the government’s yearly matching contribution will be 1,500 baht for all NSF members regardless of age, said Krisada Chinavicharana, director-general of the FPO.
According to the current structure, the government makes a matching contribution of up to 50% of whatever those aged 15-30 choose to pay, but not exceeding 600 baht a year.
For those in the 31-50 age bracket, it will pay up to 80% of their contribution but not more than 960 baht a year. Those over 50 can have their contribution fully matched by the state as long as it does not exceed 1,200 baht a year.
Members are required to make a minimum contribution of 50 baht a month, up to a maximum of 13,200 baht a year.
The fund is a retirement safety net for 25 million self-employed workers not covered by a pension fund, the Social Security Fund or a provident fund.
The FPO’s proposal must first be approved by policymakers, who must also consider the future fiscal burden and whether the budget can accommodate this, Mr Krisada said.
Previously, the NSF suggested the government raise the ceiling for matching contributions to 2,500 baht per year to boost membership.
Moreover, the FPO has proposed the idea of providing a token sum of, say, 100 baht during the initial period of membership for those who qualify for the government’s poverty scheme to encourage them to save money for retirement, Mr Krisada said.
At the end of June, the NSF had 537,000 members, up almost 100,000 from last May.
Farmers accounted for 54.9% of the voluntary pension fund’s members; merchants made up 10.9%; members who did not state their career occupied 10.6%; and freelancers, students and temporary workers accounted for the remainder of the members.
The fund amounted to 2.43 billion baht at the end of June. Of this, 47.8% has been allocated to government bonds, 22% is held in corporate bonds and 20.8% is in the form of deposit accounts. The remainder is held in bonds guaranteed by the government and state enterprise bonds.