Five strategies to promote saving for retirement

The Finance Ministry highlights five strategies to promote saving habits among Thais, which will help prepare the population to enter retirement with more stable finances, a move deemed necessary as the country is becoming an aged society.

Deputy PM and Finance Minister Pichai Chunhavajira has said that creating saving habits among young people is essential, especially for new graduates who are just entering the job market.

“Besides educating Thais of the importance of personal savings and investments, the Finance Ministry has developed innovations to ensure financial stability for Thai people,” he said.

These innovations are:

1. National Saving Fund (NSF), a voluntary saving mechanism for working people outside the government’s pension system. The fund accepts savings starting from 50 baht/month (capped at 30,000 baht/year) from Thais aged 15-60 years. The government would make a monthly contribution of up to 1,800 baht per year for each account, while the savings are also tax deductible.

After the saver reaches 60 years of age, they will be paid up to 12,000 baht a month.

2. Retirement Lottery, the ministry’s soon-to-launch new savings product. Buyers can purchase lottery tickets via an app at the price of 50 baht per ticket, with a maximum purchase of 3,000 baht per month. The lottery will be drawn weekly with the prizes being announced at 5pm every Friday.

There will be five first prizes, worth 1 million baht each, and 10,000 second prizes worth 10,000 baht each.

Every baht spent on the lottery can be withdrawn after buyers turn 60. They will also get a share of the profits earned from the investment of their contributions.

3. Thai ESG Fund, which promotes savings as well as businesses that focus on environmental, social, and governance policies. Investors will benefit from up to 30% tax deduction for income not over 300,000 per annum, provided that they have held the unit trust for more than five years.

4. Vayupak Fund 1, which features investments in state-owned securities. Sales will be open from September 16-20 at a starting price of 10,000 baht (10 baht per unit, minimum 1,000 units). Investors will receive a dividend based on actual profits, with a 3% minimum rate of return guaranteed, but will not exceed 9%.

To ensure equal distribution of the fund, the ministry will use a ‘small lot first’ method in allocating the sale at six state-run banks and financial institutes.

5. Individual Retirement Account (IRA), an initiative currently under study to promote long-term saving and investment among working people to prepare them for retirement. IRA provides a variety of investment options including deposits, securities and bonds, as well as tax benefits for investors.

The ministry said the advantage of IRA over the Social Security Fund is that the savings and investments will be tailored for each individual instead of pooling the money for big, less varied investments.