The RMF Fund in 2020 has seen many changes, such as raising the investment ceiling and canceling the minimum unit purchase ceiling, which is considered to help low-income earners invest in this RMF fund.
Let’s first understand the RMF fund.
RMF (Retirement Mutual Fund) or retirement mutual fund is a type of mutual fund that promotes long-term savings for retirement expenses, which is similar to the private sector’s Provident Fund or the Government Pension Fund (GPF) or the government’s Government Pension Fund.
For Provident Fund, some companies may or may not have it because it is not required that every private sector organization must have a Provident Fund.
Because RMF (Retirement Mutual Fund) or retirement mutual fund is a mutual fund established to encourage Thai people to save long-term for spending in retirement.
Therefore, the investment conditions of the RMF Fund are an investment that forces working people like us to invest for the long term. The RMF Fund has a variety of investment policies to be consistent with our acceptable risks, which range from low to high risks, such as treasury bills, government bonds, debentures, and stocks. We can switch funds, but we cannot sell investment units until we are 55 years old or older.
Who is the RMF fund suitable for?
RMF or Retirement Mutual Fund is suitable for all groups of people who want to have savings for retirement, such as:
- Freelance occupation groups that do not have retirement savings benefits to support them
- Employees or company employees whose employers or companies are not yet ready to provide a provident fund, causing employees or employees to be unable to save money for retirement.
- Employees or government officials who already have retirement savings benefits but want to save more to take advantage of tax deductions.
RMF Fund has not been cancelled yet.
In the past, to be frank, it must be said that in the past, LTF funds were more interesting to invest than RMF funds because RMF funds had conditions that working people or people who just invested did not like, namely, having to hold for a long time before being able to redeem, i.e. having to be 55 years old or older, having conditions that required continuous purchases every year (can be skipped for no more than 1 year, and having a minimum purchase amount of 5,000 baht or 3% of income, whichever amount is lower, etc.)
For this reason, the government has resolved to revise the criteria and conditions of the RMF fund. But how will it differ from the original RMF fund? Is it better than before? Let’s find out the answer.
The RMF Fund in 2020 is still the same, except for the conditions that have been changed.
Investment ceiling :
The new 2020 RMF Fund allows individuals to purchase it for income tax deductions, up to a maximum of 30% (different from the original RMF, which allowed purchases of no more than 15%) of income, but not exceeding 500,000 baht, with the additional condition that if we have invested in the RMF Fund,
When combined with other retirement investments, including provident funds, government pension funds, private school welfare funds, national savings funds, pension insurance premiums, and Super Saving Fund (SSF), which will be available for investment from 2020 onwards, the total must not exceed 500,000 baht.
Minimum purchase amount :
The new RMF fund does not specify a minimum purchase amount for investment units [unlike the original RMF which specified a minimum of 3% of income or 5,000 baht per year, whichever is lower]
Purchase conditions:
The conditions are the same as before: you must continuously purchase RMF investment units every year (you can skip it for no more than 1 year).
Conditions of holding:
The conditions are the same as before, that is, you must hold for at least 5 years and be 55 years old before you can sell all investment units without violating the tax deduction conditions. The new conditions for the RMF fund will be effective from 2020 onwards.
In case of breach of investment conditions in RMF funds:
In the case where the investment units have not been held for 5 years from the date of the first investment unit purchase (counted on a day-to-day basis) and there is a breach of investment conditions, investors must do the following:
- Return previously deducted tax benefits to the Revenue Department.
- If there is a profit from the sale of investment units, the investor must pay withholding tax at source in accordance with the Revenue Code Section 50(2), calculated by deducting at the income tax rate and combining the profit with other income the investor receives in that tax year to pay income tax.
In the case of holding investment units for 5 years or more from the date of first investment unit purchase (counted day by day) and must not suspend investment unit purchase for more than 1 consecutive year, with a minimum investment in accordance with the specified criteria, if investment units are redeemed before the investor reaches 55 years of age (except for investment units purchased before 1 March 2008), the investor must do the following:
- Refund of tax benefits previously deducted for no more than 5 calendar years to the Revenue Department (counting retroactively from the year prior to the year in which the investment conditions were violated)
- Investors must pay the tax refund to the Revenue Department within March of the year following the year in which the investment conditions were breached. If payment is delayed, investors must pay an additional 1.5% per month of the tax amount due.
Summary for the newly revised 2020 RMF Fund
The investment ceiling has been adjusted to 30% of income to encourage working people to save more in the fund. In addition, the cancellation of the minimum unit purchase ceiling is considered to help low-income earners to invest in the RMF fund. No matter which fund is released, every investment still has risks. However, the level of risk may vary according to the type and characteristics of the fund. High returns mean high risks, in line with the concept of high risk, high return.
Therefore, we must understand it well, look at ourselves to see how much risk we can accept, what are our investment objectives, and look at the investment policy, risks, conditions, and benefits of that fund to see if they meet our needs or not, for the greatest benefit of ourselves.
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The LTF fund has been cancelled. If we have an LTF that has reached maturity, what should we do??
