Village Fund members can join NSF scheme

Village Fund members will be allowed to join the National Savings Fund (NSF) to promote savings among locals.

Suvit Maesincee, minister to the Prime Minister's Office, who oversees the Village Fund, said the government plans to support 12 million members of the Village Fund in joining the NSF to ensure they have enough savings when they get old.

The National Village and Urban Community Fund Office and the NSF will soon sign a cooperation deal, he said.

The NSF, which was established in August 2015, is a retirement safety net for 25 million self-employed workers not covered by a pension fund, social security or a provident fund. People aged 15-60 are eligible to apply for membership.

The NSF has 520,000 members, a figure the government aims to increase to 1 million by year-end.

Farmers account for 54.9% of NSF members; merchants make up 10.9%; members who did not state their occupation come to 10.6%; and freelancers, students and temporary workers account for the rest.

Permanent finance secretary Somchai Sujjapongse said recently the NSF plans to amend the law to lift the ceiling contribution for some members to 30,000 baht a year from 13,200. The ceiling contribution was set at a relatively low level, as the Finance Ministry was concerned some people might use the channel to launder money.

The current structure requires members to make a minimum contribution of 50 baht a month, up to a maximum of 13,200 baht a year. That amount is matched either fully or in part by the government, up to a prescribed limit.

The government makes a matching contribution worth up to 50% of savings, but not more than 600 baht a year for workers aged 15-30; up to 80% but not more than 960 baht a year for workers aged 31-50; and up to 100% but not more than 1,200 baht a year for those over 50.

The Village Fund scheme was introduced 15 years ago with the aim of serving as a microcredit lender to people in rural areas, inspired by Grameen Bank in Bangladesh. The funds use a self-governing concept whereby members must ensure borrowers pay their debts to sustain money put into the funds.

Village Funds have been criticised over loopholes allowing for corruption and the injection of money into non-productive projects. The government has approved some 180 billion baht in contributions to them.