Sunday, September 27, 2020

SEC proposes provident-fund boost for ageing society

Jul 03. 2020
SEC secretary-general Ruenvadee Suwanmongkol
SEC secretary-general Ruenvadee Suwanmongkol
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By The Nation

The Securities and Exchange Commission (SEC) has proposed guidelines for amending the Provident Fund Act BE2530 (1987) to boost provident funds (PVD)s’ efficiency as a tool supporting long-term retirement savings.

SEC secretary-general Ruenvadee Suwanmongkol noted that Thailand will next year become a full-scale ageing society with the elderly accounting for 20 per cent of the total population. 

“Yet, most of today’s documented workforce are unlikely to earn adequate income after retirement. Given this landscape, retirement savings has become a part of the national agenda stated in the 20-Year National Strategy, the 12th National Economic and Social Development Plan and the Capital Market Development Plan.” 

PVDs are a major source of savings supporting post-retirement living, but only 3 million private sector employees (20 per cent) have PVD accounts. 

Moreover, only 24 per cent of PVD members are likely to have more than Bt3 million in retirement savings, said Ruenvadee. 

To increase PVD efficiency in supporting employees’ retirement and creating adequate income for the documented workforce after retirement, the SEC Board proposed four guidelines:

1. to support current PVD employers in signing up employees for PVD membership automatically unless they opt out.

2. To promote a mechanism for PVD to automatically choose investment policies for members who do not make a choice themselves by considering members’ age, risk-tolerance, etc.

3. To enhance PVD efficiency by improving member protection mechanisms: qualifications, roles and responsibilities of the Fund Committee must be clearly specified, members must be notified of their savings sufficiency through post-retirement savings forecast, and standards of regulations and PVD registration must be specified, to reduce private sector burdens and increase savings flexibility for members.

4. To develop PVD in support of the draft National Pension Fund Act, which prescribes a compulsory pension fund for the documented workforce in the private sector.

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