If anyone is a 'salaryman,' they must have heard the term 'Provident Fund' because every time we start a new job, HR will always provide us with a form to apply for membership in the fund.

Provident Fund (PVD)?

The Provident Fund, or Retirement Fund, is a fund established voluntarily by employers and employees with the main objective of providing financial security for employees upon retirement, resignation, disability, or death. This fund is regulated by the government through legislation to protect the various benefits that employees should receive, known as the Provident Fund Act. The funds for the Provident Fund come from two main sources.

        1.The accumulated money from employees is the money that employees contribute to the fund. This portion of money is deducted from their wages according to the rates specified in the regulations of each employer's fund, with a minimum rate of 2% but not exceeding 15% of their wages.

        2.The additional contribution from the employer is the money that the employer contributes to the fund every time wages are paid, according to the rates specified in the regulations of each employer's fund, with a minimum rate of 2% but not exceeding 15% of the employee's wages. According to the law, employers are required to contribute to the fund at least as much as the accumulated money from employees. For example, if we contribute 5% of our wages to the fund, the employer must contribute no less than 5% as well. Additionally, some companies may have provisions for increasing the contribution rate based on length of employment. For instance, employees who have worked for 1 to 5 years may receive a 50% match of their contributions and benefits, while those who have worked for 10 years or more may receive a 100% match. However, these conditions vary depending on the agreement between the company and the employee.

Therefore, the Provident Fund is one of the incentives that make employees want to work for a particular company for a longer period of time. It is considered as one of the benefits that employers provide to employees because employees feel that they receive additional monthly income.

In addition, employees also benefit from saving money in the Provident Fund in many ways, including

           1.It helps instill discipline in saving money passively, as the accumulated funds are automatically deducted from salaries or wages.

           2.It helps to have savings for use after retirement or after leaving the job.

           3.In case of death, the fund money will be transferred to the designated 'beneficiary' that we specify. If we assign the benefits to our family, this money serves as a sort of income security for the family.

           4.You can use the accumulated funds in the provident fund to receive tax deductions of up to 15% of your income. However, when combined with other retirement tax deductions, it must not exceed 500,000 baht.

           5.The accumulated funds paid into the provident fund will be managed by professional fund managers, which are securities companies licensed to operate provident fund management businesses. They offer diverse investment policies for us to choose from according to our preferences, such as investing in debt securities, Thai company stocks, stocks of foreign companies, and so on. When profits are generated, they are distributed proportionally among all members of the fund based on the amount of money each person has in the fund.

What should you do with your provident fund when you leave your current job?

Many people may wonder what to do with their provident fund when they leave their job. Do they need to withdraw from the fund, or should they manage the money differently? We've compiled the answers for you.

           1.You can keep your money in the same provident fund even after leaving your previous company. However, you may incur fees according to the fund's specified timeframe. This method is suitable for those who leave their job to start their own business, as well as for those who cannot decide on a new fund at their new workplace.

           2.Moving to the provident fund of the new workplace Transferring funds into the provident fund of the new workplace can be done immediately. This method allows us to avoid any fees or taxes.

          3.Withdrawing from the provident fund Withdrawing from the provident fund is suitable for those who need cash. However, withdrawing from the provident fund incurs taxes. This applies if you are not yet 55 years old and have been a member of the fund for less than 5 years.

          4.Transferring to purchase RMF for PVD This method is suitable for those who have resigned from their jobs and the new company does not have a provident fund, or they have not found a fund policy that suits them. It also applies to those who have resigned to start their own businesses or work freelance. This method allows you to avoid income tax by not withdrawing money from the fund before retirement age. Additionally, you won't incur annual fees by keeping your money in the previous fund.

When will I receive the money back from the provident fund?

We can receive money back from the provident fund upon the termination of membership, regardless of whether it is due to resignation, leaving the fund, fund transfer, retirement, or death. However, if you resign from your job or leave the fund, tax exemptions will only apply when you reach the age of 55 and have been a fund member for at least 5 years. Failure to meet these conditions will result in personal income tax liability.

The provident fund is akin to a retirement safety net for salaried individuals, enabling them to lead a financially secure and enjoyable life in their later years without burdening their descendants. However, when choosing a provident fund, one must thoroughly examine the investment policies to ensure they are suitable and aligned with their needs and risk tolerance. As investors themselves, individuals should understand the fund details, including conditions, returns, and risks, before making investment decisions.

Source:https://www.umayplus.com/content/blog/%E0%B8%81%E0%B8%AD%E0%B8%87%E0%B8%97%E0%B8%B8%E0%B8%99%E0%B8%AA%E0%B8%B3%E0%B8%A3%E0%B8%AD%E0%B8%87%E0%B9%80%E0%B8%A5%E0%B8%B5%E0%B9%89%E0%B8%A2%E0%B8%87%E0%B8%8A%E0%B8%B5%E0%B8%9E/blogdetail?blogid=2023-030000003