Provident Funds are governed by the Provident Fund Act and can be established by the employer on a voluntary basis together with the employees to supplement the Social Security retirement benefits. Each employer can set up his own fund and hire a professional asset management company to administer it.
The employees and the employer shall pay contributions to the Provident Fund. The contributions to the Fund deducted from wages shall be at a rate not lower than 2% but not exceeding 15% of the wages, with the total contribution not exceeding 500,000 Baht each year.
Every time wages are paid the employer shall deduct contributions from the wages and also pay his own contribution to the Fund in accordance with the number of the employees at the rate not lower than the rate of contribution of the employees, but not exceeding 15% of the wages.
The employer and the employees may, with the approval of the Minister of Finance, mutually agree to pay their contributions to the Fund at a higher rate than the rates prescribed above.
The employer must pay the contributions within 3 working days from the date of payment of wages, otherwise he must pay a surcharge to the Fund at the rate of 5% per month of the amount of contributions for the period the payment is paid late.
Employees who are 55 years old but which are not eligible to retire, can drawdown their accounts in installments. The account is paid as a lump sum only if they leave employment for reasons other than resignation. In that moment, they can transfer their account balance to another retirement-based fund.
The Provident Fund, is expected to become mandatory in 2018 and would apply to all employers (privately owned companies, state enterprises and public organizations), as well as to all employees between 15 and 60 years old.