In Thailand Provident fund is the fund voluntarily established by agreement of
the employees and employer and registered under the Provident Fund Act B.E.
2530 to encourage savings and serve as security for employees and their
respective families in the event of employees’ termination of employment, resignation
from the company or from the provident fund, retirement, disabilities and death.
A fund may be set and registered as a single fund for employees with sole
employer or a pooled fund for employees with more than one employer and/or multiple
investment policies. Thus, as required by law, the investment policy of the
provident fund to be registered must comply with the Security and Exchange
Commission’s (SEC) rules and regulation.
Once the provident fund has been registered with the Ministry of Finance, it is
considered as a juristic person, a legal entity separated from both the
employer and the fund manager. None of them has the right to claim on the fund
because it is the Registrar appointed by the Ministry of Finance who has the
authority and duties to supervise the management of the fund and has the power
to order the fund manager to give statement and provide reports on the
management of the fund. In the case of the fund manager or the company having
financial problems or has to end its operation, it is guaranteed that the
employees will still receive their money from the fund upon their resignation
or retirement in accordance to their entitlement and the fund regulations.
As specified in the Provident Act B.E. 2530, the provident fund must consist of
percentage of both employees’ and employers’ contributions. The contribution
rate starts from 2% – 15% of the employee’s salary. Normally, it depends on the
company’s policy on how much rate to be used as long as the employee’s
contribution rate will not exceed the employer’s contribution rate and the
employer’s contribution rate must be more than or equal to the employee’s
contribution but not more than 15% of the salary.
Benefits of Provident Fund to Employees
– Tax deductible on employee’s contribution
– Tax exemption on earnings of the fund
– Deferred tax payment until resignation
– Receive higher welfare benefits upon resignation or retirement
– Secure more savings for oneself and family
– Future security for family in the event of disability or death
– Tax exemption on the lump sum received in the event of retirement, death or
Benefits of Provident Fund to Employer/Company
– Tax benefits. Company’s contribution to the provident fund can be used as company’s
expenditures of not more than 15% of the company’s annual salary expenses of
– Reduce the burden of company administrative works
– Maximize the company’s cash flow
– Another means of employee fringe benefit; employees will feel more loyal to the company which can result to more efficiency and productivity of the workforce
Read the law here, Provident Fund Act.