What will I receive after retirement? How will I manage the money I receive? Do I still have to pay taxes? What should I prepare for?
Therefore, in this article, the admin will take us to understand what we need to know after we retire. What will we get and what do we need to prepare? (For 2020) Those who have not yet retired can also understand this matter in advance.
When you retire, what money will you receive from the company?
When you retire, what kind of money will you receive from the company? The main ones you will receive are income from your last year of employment, compensation according to labor law, and provident fund (if any).
Receive compensation in accordance with labor laws:
Retirement is like “termination”. The Labor Protection Act provides for retirement and compensation for retirement as follows:
- In the case where the retirement age is set to “before reaching 60 years of age,” retirement shall be considered to be in accordance with work regulations, employment contracts, or agreements between employers and employees.
- In the case where the retirement age is “over 60 years old or not specified”, the employee has the right to request retirement when reaching 60 years old or more, and it will be effective 30 days after the expression of intention.
Employees have the right to receive compensation (in the case of retirement, compensation is calculated in the same way as in the case of termination).
- Employees who have worked for 120 days but less than 1 year receive 30 days’ compensation.
- Employees who have worked for 1 year but less than 3 years receive 90 days’ compensation.
- Employees who have worked for 3 years but less than 6 years will receive 180 days of compensation.
- Worked for 6 years but less than 10 years, received 240 days of compensation.
- Employees who have worked for 10 years but less than 20 years receive 300 days of compensation.
- Employees who have worked for 20 years or more receive 400 days of compensation.
In the case that we have worked until retirement age and have worked for more than 5 years, the compensation according to the labor law is entitled to deduct expenses in calculating taxes and can be filed separately without having to include it with the annual income.
- Income from salary, bonuses, or other income received in the last year before leaving work (before retirement) must be filed as normal (Form Por.Ngor.Dor.90/91).
- Separate tax filing for the income from “termination” can choose to pay tax according to Section 48 (5), which means this income is considered income that the employer pays us in one go, calculated from the compensation received, deducting 7,000 baht multiplied by the number of years worked, and then multiplying the total by 50% to calculate the net income to be used to calculate income tax later.
How do I file taxes after retirement?
For example, you can imagine
I work for a private company and will retire at the age of 60 at the end of this year. I have worked for 14 years and receive a fixed salary throughout the year of 80,000 baht per month. I have been a member of the provident fund since I started working. When I retire, I will receive a total of 800,000 baht from the fund. The money that the employer pays according to the company’s policy is equal to the last month’s salary multiplied by length of employment, which is 1,120,000 baht.
Personal income tax for the 2020 tax year (before retirement) was filed as usual because it was considered that Ms. Jintana still had an income of 100,000 baht per month (Form Por.Ngor.Dor.90/91).
For the matter of the money from “termination” of 1,120,000 baht, it can be filed separately (submitting an attachment, calculating the expenses as 1,120,000 baht) by calculating from 1,120,000 baht – (first expense 7,000 baht x 14 years of employment) equals 1,022,000 baht. Then deduct the second expense by another 50%, so the net income is 511,000 baht.
This amount of 697,500 baht will be used to calculate taxes. This net income will be calculated according to the personal income tax rate, but will not be exempted from the net income of 150,000 baht like filing Form Por.Ngor.Dor.90/91.
From the table, we can see that if we file taxes separately, we will pay only a small amount of tax on our retirement income. This is different from filing taxes together with our final year’s income, because this will increase our net income and increase our tax base.
Therefore, it is recommended to take your retirement income and file a separate attachment. This will allow you to deduct more expenses, which will help you save more on taxes and leave more money for retirement.
What should I do with my provident fund after I retire?
Provident Fund :
This is another benefit that the company provides to employees when they resign or retire. The conditions to consider are:
“You will receive a full tax exemption” if you are 55 years old and have been a member of the Provident Fund for more than 5 years.
For example, in the case of Ms. Jintana, she has been a member of the provident fund since she started working. When she retires, she will receive a total of 800,000 baht from the fund. All of the money in the past will be exempted from tax.
By Ms. Jintana, there are the following options:
- You can receive 800,000 baht from the fund and then spend it or invest it (Is this method risky? Withdraw all the money. If there is no good method to support it, the money may run out quickly.)
- Or decide not to receive this money yet because there is enough money in other areas to use, you can keep this lump sum in the fund as before (with a small fee). You may keep it as an inheritance or use it in times of real need. Another option is to transfer money from the fund to RMF for better returns because there are more investment options in RMF than in provident funds. However, investments that expect higher returns also come with risks. This depends on how much investment risk you can accept when you retire.
“Will not receive the full tax exemption” if reaching the age of 55 but has been a member of the provident fund for less than 5 years.
This means that if we decide to leave the fund, we will have to pay taxes on both the profits from our savings, the employer’s contributions, and the benefits from the employer’s contributions, which will be taxed at a very high rate.
Advice: If this is the case, it is better to keep this money in the fund as before, let it stay in the fund for more than 5 years, then redeem it. Or, transfer it to invest in RMF and then redeem it later.
Conclusion
Retirement is something that every working person has to face. The related taxes are also important. Because if we understand how to calculate and file taxes, as well as plan the money we receive from retirement well, life after retirement will be easier. There will be enough money to use.
However, in order not to fall into a state of running out of money, we should find some small work that can generate some income after retirement. At least it will be an additional income and a way to relieve boredom when we no longer have a regular job.
Source: https://www.rd.go.th
For more articles about taxes, please read:
Regarding personal income tax, what documents do I need to prepare and how is it calculated?
Provident Fund (PVF) What should I do if I have to resign from my job?
