Pension scheme 'lacks funding'

The government has allocated only Bt225 million to finance the establishment of the National Savings Fund – far short of the previous government’s plan to provide Bt1 billion as seed money, former finance minister Korn Chatikavanij said during the second reading of the 2012 Budget Bill on the third day of the debate.

The universal pension fund bill was passed into law by the Democrat-led government, but procedures to establish the fund are pending. Members and the government are required to pay contributions to the fund, which is due to start operations in May. The fund will then provide pension payments to people not currently covered by the Social Security Fund, Government Pension Fund or private provident funds. Estimated to number 24 million to 30 million, they are mostly low-income people working in the informal sector.

Korn attacked the government for giving priority to its populist first-car scheme, under which the government is providing tax breaks worth about Bt30 billion to first-time car buyers.
“The government set aside Bt100 million for advertising to promote its first-car scheme, which will benefit only 100,000 consumers, and plans to invest Bt1 billion in an IT system for the scheme. But the government is investing very little for the 30 million [people who would be covered by the new pension fund],” Korn said. He also criticised Finance Minister Thirachai Phuvanatnaranubala for delaying the appointment of the National Savings Fund’s secretary-general.

Vicharn Meenchainant, a member of the House committee on budget vetting, defended the government, saying it might tap the central budget if more money is needed to implement the pension fund. He said the government need not provide Bt 1 billion in its first year of operation.
Korn also claimed the Finance Ministry was unwilling to levy land and property taxes on landlords. A bill that would do so was proposed by the previous government. Korn said the government has failed to provide funding for the Treasury Department to develop a database of property owners to facilitate tax collection.