The retirement savings framework is scheduled to go before the cabinet for consideration on Tuesday.
The economic cabinet on Monday approved guidelines for a retirement savings scheme aimed at enabling people to support themselves in retirement while reducing the government welfare budget burden.
Speaking after a meeting of the economic cabinet chaired by the prime minister on Monday, government spokesperson Siripong Angkasakulkiat said the measures to expand savings opportunities and improve financial security would provide people with more diverse and convenient savings channels, stimulate greater savings, especially among middle- and low-income earners, enhance overall financial wellbeing and ensure sufficient income for retirement.
They would also help ease the government’s fiscal burden for elderly-care welfare for those unable to support themselves. The retirement savings framework will be proposed to the cabinet for consideration on Tuesday.
While further details of the measures have not been disclosed, a source from the Finance Ministry who requested anonymity said the retirement savings measures will be based on the individual savings account (ISA) model, an approach already studied by the Stock Exchange of Thailand (SET) that allows taxpayers to choose to invest in stock market securities, government bonds or other instruments according to their risk appetite.
The source added that the Finance Ministry is proposing to set a combined ceiling for all personal income-tax deductions — including ISA accounts, retirement mutual funds (RMFs), Super Savings Funds (SSFs), life insurance, health insurance and housing loan interest — at no more than 800,000 baht a year.
The ISA is derived from Japan’s Nippon Individual Savings Account.
The SET adopted this idea to create the Thailand Individual Savings Account (TISA), aiming to encourage Thais to develop financial discipline through stock investment and promote long-term investment rather than short-term speculation.
With flexible savings and investment mechanisms, attractive tax benefits and potential government co-contributions, the TISA project is expected to become an important tool for strengthening Thailand’s financial market and supporting long-term economic development, said Mr Ekniti.
According to Mr Ekniti, the TISA will involve a major overhaul of tax incentives by increasing savings deduction limits and providing tax exemptions to attract more savings into the capital market.
Under this measure, the total investment deduction will be capped at 800,000 baht a year, and the first 200,000 baht of investment will be exempt from withholding tax, provided the assets are held for over five years.
The government will also introduce a Savings Plus scheme to give people access to secure investments through government bonds, with a minimum investment of 1,000 baht at market prices. This programme will help low- and middle-income earners begin saving in a stable and accessible way.
In addition, the government will encourage people to purchase life insurance and non-life insurance by offering tax-incentive measures to promote greater uptake of risk protection.