SEC proposes amendment to PVD Act
Thailand’s SEC has proposed draft guidelines for amending the Provident Fund Act B.E. 2530 (1987) in accordance with the SEC Board’s resolution to enhance the role of provident funds (PVD) as an efficient tool for supporting long-term, retirement savings, creating a mechanism for members to choose an investment policy suitable for their goals, and promoting adequate post-retirement income for Thai workforce in alignment with the draft National Pension Fund Act.
Ruenvadee Suwanmongkol, Secretary-General, SEC, said: “By 2021, Thailand will have become a full-scale aging society with the elderly population accounting for 20% of the total population. Yet, most of today’s documented workforce are unlikely to earn adequate income after retirement. Given this landscape, retirement savings has become a part of the national agenda stated in the 20-Year National Strategy, the 12th National Economic and Social Development Plan and the Capital Market Development Plan. Currently, PVD is a major source of savings to support employees’ post-retirement living. Unfortunately, there are only 3 million PVD members, accounting for 20 percent of the total documented employees in the private sector. Moreover, only 24 percent of the total PVD members are likely to earn retirement savings more than the minimum estimate of THB3 million.”
The SEC has therefore proposed guidelines for amending the Provident Fund Act B.E. 2530 (1987) to increase PVD efficiency in supporting employees’ retirement well-being and creating adequate income for the documented workforce after retirement, it said in a press release.
The SEC Board Meeting No. 9/2563 passed a resolution on 4 June 2020, approving in principle the proposed guidelines which cover four major areas, as follows:
- To support current PVD employers in signing up employees for PVD membership automatically unless opting out.
- To promote a mechanism for PVD to automatically choose a suitable investment policy for members who do not make a choice by themselves by taking into consideration such members’ characteristics such as age and risk tolerance.
- To enhance PVD efficiency by improving member protection mechanism to ensure fair treatment whereby the qualifications, roles and responsibilities of the Fund Committee must be clearly specified, members’ savings sufficiency must be notified through post-retirement savings forecast, and standards of regulations and PVD registration must be specified, to reduce private sector burdens and increase savings flexibility for members.
- To develop PVD in support of the draft National Pension Fund Act, which prescribes a compulsory pension fund for the documented workforce in the private sector.
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