Thailand's government will launch a National Savings Fund next month with the aim of helping millions of citizens who are self-employed or working in informal sectors to achieve adequate savings in retirement, confirmed a Bangkok-based government spokeswoman.
The new savings plan, to be formally launched Aug. 18, will be voluntary and cover Thai citizens between the ages of 15 and 60.
The plan calls for encouraging participation through matching government funds. For participants age 15 to 30, the government will contribute 50% of an individual's contribution, up to 600 baht ($18) a year; the match for ages 30 up to 50 will be 80%, up to 960 baht a year, and for ages 50 through 60, 100%, up to 1,200 baht per year.
According to the government's calculation, individuals who start saving 1,000 baht a month from age 20 can enjoy 7,000 baht per month in retirement, at 60, through the rest of their lives.
The new plan is not open to anyone already in a formal pension plan. An announcement about the plan on the government's website said up to 30 million Thai citizens could benefit, including farmers, housewives, construction workers, taxi drivers and day laborers, as well as self-employed professionals such as doctors, lawyers and architects.
The government's announcement said the new plan is aimed at getting a wider swathe of the population into the habit of saving, and reducing inequality in society.
Analysts hailed the move, while conceding it will take considerable time before its impact on Thailand's retirement landscape can be gauged.
“There should be a large number of people who can benefit from the plan,” but its voluntary nature makes it difficult to guess the impact, said Rudeewan Mikhanorn, a Bangkok-based tax partner – private client services, with EY Thailand, a member firm of Ernst & Young Global Ltd.
The intention is good but the takeup will determine how effective it is, agreed Marcus Kok, Singapore-based principal pension consultant with PricewaterhouseCoopers Asia Actuarial Services. The matching funds, which should look relatively attractive for people living outside of Thailand's biggest cities, provide reason to be hopeful, but it will likely take a number of years to judge, he said.
