The draft National Pension Fund (NPF) Act has set the fund withdrawal age at 60, in contrast with other long-term retirement funds that allow withdrawal at 55.
Provident funds, retirement mutual funds, the Government Pension Fund and the Social Security Fund allow members to withdraw funds at 55.
Araya Thirakomen, chairwoman of the Association of Provident Funds, said the NPF's withdrawal requirement would help members extend their savings. But it may also affect employers' decisions to join the NPF, said Ms Araya.
She said the benefit of provident funds for employers is they have a lower burden for funding contributions, as they typically have three or four years until they are required to make full matching contributions. But employers have to make full matching contributions to the NPF from the first year.
Employers can also stop their contributions when employees reach 55 in other funds, in contrast with the NPF, where employers have to continue their contributions until employees turn 60.
Under the Provident Fund Act, employees can select their investment choice and fund manager, but the NPF will outsource management and fund members have no involvement with the investment decisions.
Ms Araya said the standards for all retirement funds including the GPF and provident funds should be the same in terms of employers' contribution rates, retirement age, the fund's investment management criteria, and tax deductions.
Supanee Chantaramas, senior expert on savings and investment at the Finance Ministry's Fiscal Policy Office, said the draft NPF Act is being considered by the Office of the Council of State.
If approved, the Act will be sent to the National Legislative Assembly with the expectation it will take at least 1½ years before coming into effect.
"At present, if a company has no provident fund, it can set one up or wait until the NPF becomes effective," said Ms Supanee.
"This Act will cover about 8 million workers and is expected to have 64 billion baht in assets under management for the first year."
She said the NPF requires companies with 100 employees or more to apply to join the fund. After three years of NPF operation, the Act requires companies with 10 employees or more to join the fund. The number of employees drops to one, which means every company, after seven years.
Employees' contribution rate for the first 1-3 years of inclusion in the NPF is 3%, increasing to 5% for year 4-6 and 7% for years 7-9.
Employees with salaries below 10,000 baht per month do not have to contribute to the NPF, but employers have to contribute 3% of their salary for them.
