Thailand: Official explains pension fund contribution requirements.

(From Thai Press Reports)

Section: General News - A mandatory savings law will start with a minimum contribution requirement of 3% of employee salaries per month and potentially increasing to 6% in the near future, says Naris Chaiyasoot, the director-general of the Fiscal Policy Office, the Bangkok Post reports.

The law would not cap contributions, he said, with a new national fund patterned after the Government Pension Fund to be set up to manage assets on behalf of members.

Matching contributions would also be made by employers, who would be able to deduct contributions from taxable corporate income. Employee contributions would similarly be offered tax incentives, similar to existing deductions offered for provident and retirement mutual funds.

Dr Naris said a new national pension fund would help supplement existing coverage offered to private workers through voluntary provident funds and the mandatory Social Security Fund.

Authorities, however, worry that existing coverage is insufficient for most workers. According to studies, while retirees should have pension coverage equal to 50% of their final salaries before retirement to maintain their current standard of living, current systems offer coverage of just 13%.

An ageing population and the need to boost long-term domestic savings in anticipation of rising investment needs are other factors pushing authorities to introduce new savings programmes.