Savings fund office due in 2010

       The legal framework for a new nationwide savings fund should be approved by the cabinet and the Parliament in 2010, according to the Finance Ministry.
       Assuming Parliament's approval, a fund office to oversee the programme could be established by mid-2010, said Somchai Sujjapongse, the directorgeneral of the Fiscal Policy Office.
       The national savings programme is aimed at the 24-25 million people nationwide estimated to lack any form of formal, long-term retirement savings.
       Retirement savings programmes include the Social Security Fund, which is mandatory for workers at registered companies and currently covers 10 million people. Another 2 million civil ser-vants participate in the Government Pension Fund, while many employees may opt for additional coverage through voluntary provident funds, long-term equity and retirement mutual funds.
       The new voluntary savings programme is aimed primarily at lowincome workers, with participants able to set their monthly contributions from 100 to 1,000 baht. Contributions are then matched by the government.
       The fund could raise 56 billion baht per year if 25 million people participate at the minimum contribution of 100 baht per month, said Dr Somchai.
       Authorities say supplementing longterm savings will be critical considering the country's ageing demographics and longer lifespans.
       Within two or three decades, the cost of social and health services for the elderly could consume up to two-thirds of public spending unless people set aside more funds for their retirement.
       Currently 70% of the workforce lacks any formal retirement savings plan.Thailand's elderly now total more than 7.42 million.
       But while in 2007, the elderly accounted for just 9% of the population,with seven workers for every person in retirement, authorities estimate that by 2027, the elderly will increase to 18% of the population, with four workers for every one person in retirement.
       By 2047, those over 60 are expected to make up 28% of the population, with only two workers in the labour force for every retired person.
       Participation in the new savings programme will be open to those under the age of 60 and currently not covered by any formal retirement plan.
       The government will contribute to accounts according to their holder's age, with members aged 20-30 receiving monthly public contributions of 50 baht,those aged 30 to 60 receiving 80 baht and those over 50 receiving 100 baht.
       A member saving since their twenties would receive a monthly pension of 2,210 baht upon retirement, including separate payments already offered by the government to the elderly.
       Economists attending a conference on the savings programme said monthly contributions should be set lower to encourage participation.
       Patamawadee Suzuki, dean of economics at Thammasat University, said setting contribution rates at just 50 baht per month instead of 100 would help,based on surveys of the savings capacity of low-income rural residents.
       Thaworn Sakunphanit, a senior expert at the National Health Security Office,noted that the draft law guaranteed returns for savers equivalent to oneyear deposit rates quoted by the country's five largest banks.
       But he said an even better step would be for the fund to offer guarantees on the safety of members' contributions,to help reassure participants that their principal savings are not at risk.