The Finance Ministry plans to seek cabinet approval to let two state-owned banks raise their budget for refinancing loan shark debts, as their entire 10-billion-baht credit facility has been nearly drawn down.
The ministry has asked the Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives -- the two banks tasked with lending to low-income earners in order to refinance their underground lending -- to utilise the additional loan amount to ease lending to 1.3 million registrants of the government's welfare and subsidy scheme who are loan shark debtors, said finance permanent secretary Somchai Sujjapongse.
The 1.3 million registrants have reported that their combined underground lending amounted to 70 billion baht and the Finance Ministry expect that the debt principal will be lower than 70 billion, he said.
Rooting out loan sharks is a top priority for this government. Apart from refinancing, the government is widening opportunities for those at the bottom of the economic ladder to access formal financial sources and shun loan sharks by issuing licences to nano-financing and pico-financing lenders.
In another development, Mr Somchai said members of the National Pension Fund (NPF) are expected to earn up to a half of their final month's salary after retirement when taking the old-age pension benefit of the Social Security Fund (SSF) into account.
Income at 50% of the final month's salary is the level that the Finance Ministry said that it will be sufficient for retirees to comfortably maintain living standards in their retirement life.
According to the Fiscal Policy Office's (FPO) calculation, an employee who is an NPF member when he is 35 and earns starting salary at 10,000 baht and a final salary at 39,966 baht will obtain 11,959 baht a month from the mandatory pension fund and another 7,500 from the SSF.
The calculation is also based on an assumption that the NPF's investment return stands at 5%.
The mandatory pension fund for employees, expected to be enforced in 2018, will require employers and employees each to contribute 3% of the employee's salary for the first three years to the fund before increasing it to 5% during the fourth to sixth years, 7% between the seventh and the ninth years and 10% from the 10th year onwards, with base salary capped at 60,000 baht per month.
The law requires companies with 100 employees or more to match employees' contributions to the fund within the first four years of its enforcement.
Companies with at least 10 employees will have to offer compulsory retirement savings from the fourth year of implementation.
The Finance Ministry estimates that the budget needed to provide a retirement safety net will jump to 680 billion baht in 2024 from 270 billion in 2014.
