Less than a quarter of retired provident fund members have sufficient minimum savings for retirement, according to analysts, as salaried employees older than 50 are encouraged to save more money for retirement as Thailand becomes an aged society next year.
Ruenvadee Suwanmongkol, secretary-general of the Securities and Exchange Commission (SEC), said yesterday records show a low percentage of provident fund members have sufficient savings for retirement.
"The data from December 2021 showed only 23% of all retired members or precisely 8,730 employees have retired with savings of more than 3 million baht, which is the minimum required amount for retirement," she said.
Two of many factors that contribute to insufficient savings among retired members are a lack of knowledge about savings and limited investment plans provided by employers, said Sittasri Nakasiri, director of the Portfolio Advice and Provident Fund Supervision Department at the SEC.
"We have found more than half of employers do not provide any investment policies for employees, whereas those who have done so mainly offer bonds," she said.
The current coverage ratio of provident funds is 18-19% of the total workforce in Thailand, down from 20% pre-Covid. The pandemic also affected employees' liquidity, causing them to withdraw membership. The number of provident fund members dropped to 2.8 million from 3 million after the pandemic hit.
The average number of employees who retire every year is 40,000, and 90% choose to withdraw all their savings from the provident funds. Ms Sittasri suggested members withdraw everything only if they plan to invest it somewhere else for better results.
"Employees have several other investment options, though we suggested provident funds because employees also receive a top-up from their employers," she said.
Ms Sittasri urged companies to provide employees with sufficient investment policies and follow up on the funds' performances.
Next year Thailand will experience a significant demographic change as more than 20% of the population will be older than 60. Employees should prepare for their retirement by making effective savings plans, said Ms Ruenvadee.
"This presents a challenge not only to the provident fund department, but also the country," said Ms Sittasri. "While this year our funds produced a negative return, many experts expect the tension should ease next year."
