NSF to allocate assets into equities for higher returns

The National Savings Fund (NSF), a voluntary pension fund for self-employed workers, plans to start allocating its assets into equities with a cap of 20% of its portfolio this year in an effort to generate higher return to its members.

The NSF may face greater volatility from equity investment, but it will be a boon to members who put money into the fund until they are 60 as it offers the opportunity of a greater return long-term, said the NSF’s secretary-general Somporn Chitpenthom.

The pension fund has never ploughed money into the equity market since it started in August 2015, even though the law allows it to allocate up to 20% in higher risk assets, including equities and at least 80% in high-security assets.

Mr Somporn said that high-security debt instruments will continue to dominate the NSF’s investment portfolio, despite the spike in yields of global bonds, including Thailand’s, in response to the US Federal Reserve’s recent and future interest rate increases.

The NSF will focus on investing in debt instruments with maturity of 3-5 years and hold them until they are due to earn interest rate as planned, he said, adding that it will also add investment weight in investmentgrade corporate bonds.

As of March 10, the NSF’s total capital amounts to 2.08 billion baht and its returns stood at 2.08%.

Deposits and bonds guaranteed by the Finance Ministry accounted for 72.7% of the NSF’s investment portfolio, investmentgrade corporate bonds for 26.4% and state enterprise bonds make up the rest.

The NSF is a retirement safety net for 25 million self-employed workers not covered by a pension fund, social security or a provident fund. People aged 15-60 are eligible to apply for membership. Members are required to make a minimum contribution of 50 baht a month, up to a maximum of 13,200 baht a year, and the amount is matched fully or in part by the government up to a prescribed limit.

The government makes a matching contribution worth up to 50% of savings but not more than 600 baht a year for workers aged 15-30, up to 80% but not more than 960 baht a year for workers aged 31-50, and up to 100% but not more than 1,200 baht a year for those over 50.

The NSF is asking for the government to raise the ceiling for matching contributions.