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Amendments to provident fund law sought

The Association of Provident Fund is seeking amendments in the law governing the industry, with the aim to force all business entities establish provident funds and change the benefit payout pattern.



The Association of Provident Fund is seeking amendments in the law governing the industry, with the aim to force all business entities establish provident funds and change the benefit payout pattern.

Pisit Lee-ahtam, chairman of the association, said that under the proposed amendments which are submitted to the Finance Ministry, the association aims to make it compulsory for all business entities set up provident funds. Under this plan, all employees will be automatically part of the provident fund scheme. While this will increase the number of members and contributions to the funds, the association also suggested employees’ contributions can exceed those of their employees for retirement purposes.

Meanwhile, as Thailand now turns to ageing society, to ensure the financial stability of the provident funds, there should be a change in the benefit payment pattern he said. At presennt, a provident fund member can get the full benefit paid in a cash lump sum. Under the proposed amendment, the benefits can be paid out on a monthly, quarterly or yearly basis.

According to the association, total contributions to 453 provident funds are worth about Bt75 billion per annum, against outflows of about Bt50 billion. The funds were established by 11,793 private companies and state enterprises, having 2.34 million members. The outstanding value of the industry is Bt665 billion.

By value, the industry has shown the 12 per cent increase per year.

Employers are now obliged to contribute 6.5 per cent of salary to the funds, while employees’ contributions equal 4.8 per cent.


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