The Finance Ministry has amended a draft bill on the National Pension Fund (NPF) by raising the ceiling matching contribution for employers and employees to 30% from 10% to prepare for higher savings needs in the future.
The 30% is the maximum contribution required by law, not the real contribution, which will be increased gradually, said Warotai Kosolpistkul, adviser to the Fiscal Policy Office.
The bill would require employers and employees to make matching contributions of 3% of the employee's salary to the fund for the first two years before increasing to 5% during the third to sixth year and 7% for the seventh to ninth year, with the base salary capped at 60,000 baht a month.
The 3% contribution is expected to be the rate accepted by the private sector for the initial stage of the law's enforcement, and it should not be burdensome to employees, he said. Employers alone must contribute to the mandatory pension fund if employees earn 10,000 baht a month or less.
Those earning 10,000 baht a month or less account for half of the total workforce.
He said that the Finance Ministry has confirmed its stance to change the ceiling to 30% to the Council of State, which, after vetting the draft bill, will forward it to the National Legislative Assembly for deliberation.
To alleviate employers and employees' burdens, the Finance Ministry will consider lowering the contribution rate to the NPF if the Social Security Fund raises its contribution requirement, he said.
The draft bill is aimed at providing a retirement safety net to employees who are not covered by voluntary provident funds. There are 16 million workers and only 3 million are members of voluntary provident funds, with a combined fund size of 900 billion baht, leaving 14 million not covered by retirement benefits.
If the bill passes into law, all employees aged 15-60 (excluding those covered by voluntary provident funds) must contribute to the pension fund.
The law will require firms with at least 100 employees, those with Board of Investment tax privileges, concessionaires, listed firms and state enterprises to match employees' contributions to the fund within the first year of enforcement.
Firms with at least 10 employees will have to offer compulsory retirement savings from the fourth year of implementation, and those with only one employee must contribute from the sixth year. In cases where firms contribute less than the mandatory pension fund requirement, they would be required to at least match the minimum mandatory contribution or switch their contributions to the NPF.
