GPF member contribution ceiling set for increase

The Government Pension Fund (GPF) is amending the law to raise the ceiling for member contributions to 30% in a bid to increase income after retirement to 50% of final salary — the level that the Finance Ministry considers sufficient for a quality life post-retirement.

Pension fund members currently can contribute 3-15% of their monthly salary with the government matching at 3%, making their retirement income stand at 30-40%, said Somchai Sujjapongse, the finance permanent secretary and GPF chairman.

The increase in the maximum contribution for GPF members is one among seven issues to be amended.

Others include expansion of the pension fund’s scope of investment, its ability to manage members’ money to be transferred from other funds and allowing members who turn 60 to obtain contributions and benefits before the end of the fiscal year.

The GPF plans to set up its own asset management company to be another source of income, Mr Somchai said.

All of its members as well as former ones who still keep their retirement savings in the pension fund are able to choose investment plans, offering greater variety.

In the event that a new member does not choose an investment plan, the fund will put them on the “life path”, which adjusts assets and risk allocation based on age.

At the end of last year, the fund managed asset for 997,277 members, with a 7.73% increase in the net asset value to 769.8 billion baht.

GPF allocated 64.2% of its investment portfolio to fixed income, 20.2% to equity and the rest to alternative assets.

It delivered a net return from investment of 5.1% last year and has managed 6.61% since its inception, levels which are well above the inflation rate.

Meanwhile, Somporn Chitpenthom, secretary-general of the National Savings Fund, said the proposal to allow those who are already covered by the GPF, the Social Security Fund or a provident fund to become NSF members is meant to ensure that all Thais will be able to afford food after retirement.

The law in its current form bars the above three groups from being NSF members.

The NSF is a voluntary pension fund for 27 million self-employed workers. It now has 532,000 members with combined capital of 2.28 billion baht.

Launched in August 2015, the NSF aims to double its membership by year-end.

To draw more self-employed workers into the fund, the NSF board recently agreed to seek the Finance Ministry’s approval in raising the ceiling for the government’s matching contribution to 2,500 baht per year per member across the board, while the contributions of 50%, 80% and 100%, depending on age, will remain in place.

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

Members are required to make a minimum contribution of 50 baht a month, with the maximum annual contribution set at 13,200.