Ministry withholds ‘free cash’ pensions
The Labour Ministry has refused to pay social security fund contributions to people who subscribed to a scheme under Section 40 of the Social Security Act.
The payment was put on hold after hundreds of Section 40 subscribers went to social security offices to cancel their membership after contributing to the fund for just one month.
They were taking advantage of a government policy implemented last month. The policy offers social security benefits to noncivil servants and private sector employees who are already entitled to their respective pension schemes.
Under the scheme, people who are 60 years and older can claim the benefits. More than two million registered for Section 40 membership from Dec 8-9 last year.
The subscribers must make monthly contributions to the fund to receive benefits such as free medical care. Their contributions vary from 70 baht to 200 baht depending on the package they hold. The government also contributes.
But many who registered for the scheme last month have already said they want to cancel their subscriptions. They hope to retrieve their money plus the government contributions, which is seen as free cash.
The most popular package in the scheme was the one in which subscribers pay 100 baht a month and the government matches their contribution. Subscribers who wanted to cancel their membership and collect the government’s portion of the contribution were disappointed after learning the Labour Ministry was putting the payments on hold.
Kowit Sajjawiset, spokesman for the Social Security Office (SSO) at the Labour Ministry, said only the subscribers’ contributions will be disbursed.
The SSO is seeking advice from the Council of State, the government’s legal arm, as to whether subscribers are entitled to collect the government contribution when they leave the fund after a brief period.
Doing so defies the intention of Section 40, which encourages people to build up savings over at least one to two years.
The Council of State’s decision is expected to be forwarded to Nakhon Silpaarcha, the labour permanent secretary, for consideration before the end of the month.
According to Mr Kowit, the permanent secretary earlier pointed to flaws in the fund, warning its “loose” requirements could cause a financial burden on the state.
Subscribers were permitted to put in the equivalent of 32 times their monthly contribution on their first month of registering.
This could cost the state almost a billion baht in government contributions.
Sinchai Wongsangthong, 72, a Section 40 subscriber, said information about the fund was vague. He said some people he knew subscribed with the sole intention of claiming the government’s contribution.