Provident Fund – Provident Fund The HR department recommends saving, but how can you save when you don’t even have enough money each month?
But it is shocking that many working people “refuse” to apply for the Provident Fund, even though the company provides them with benefits in this regard. Why do they refuse to apply?
The starting point comes from “misunderstandings”. There are mainly 2 issues.
The first point is the misunderstanding that “the salary is low and not enough to spend, so the salary is not deducted to be put into the provident fund.”
This is purely a matter of financial management. You may view the deduction as a loss of benefits, causing your salary to decrease, resulting in insufficient money to spend.
Did you know that every baht we deduct into the provident fund, our employer (or the company we work for) will also contribute? But how much depends on the conditions of that employer.
For example, if our salary is 20,000 baht, then 5% is deducted into the provident fund, which is 1,000 baht.
If the company has a 5% matching condition, the company will match another 1,000 baht for us. This means that “saving through the provident fund, 100% profit immediately” because we only save 1,000 baht, but we get profit in the form of the company matching another 1,000 baht for us immediately.
Our 1,000 baht and the company’s 1,000 baht will be managed by professional fund managers to generate more returns for us. This is easy, we get both the company’s contribution and the opportunity to profit from the investment.
But don’t forget that any investment has a chance of winning, but also a chance of losing.
The longer we work, and the more we deduct from our provident fund since we first started working, plus we choose to invest in funds that meet our goals, we can comfortably have millions before we retire.
The second point is the misunderstanding that “if we want to use the money that we deposit in the provident fund, we cannot withdraw it.”
First, you need to understand the purpose of having a provident fund. It is for us to save money for use in retirement. Therefore, they have quite a few rules and regulations, such as being able to redeem when you are 55 years old or older.
Or even the conditions for receiving money from the employer will depend on the policy of each company. Mostly, the employer will tie our length of employment to the contribution rate and benefits of the contributions that will be paid.
For example, if we work for 1 year or more but less than 2 years, the company will pay when the membership ends, which is 20%.
- From 2 years and up but less than 3 years is 40%
- From 3 years and up but less than 4 years is 60%
- From 4 years and up but less than 5 years is 80%
- And from 5 years and up is 100%.
This means that the longer we work, the more our contributions and benefits will increase. If we work for more than 5 years, we will immediately receive the company’s contribution and 100% interest.
In what cases can we leave the Provident Fund? Yes
, but it must meet the following conditions, such as:
- Resigned from employment due to death, disability or retirement
- Resigned from employment due to employer termination
But if we really need money and really need to use the money, can we withdraw from the provident fund? Yes, we can, if we want, but we have to accept the consequences that will follow, such as:
- If you leave before 5 years of working with your employer, you will receive the employer’s contribution in the proportion that they have specified.
For example, if you leave after working for less than 3 years, you will only receive 40% of the employer’s contribution.
But don’t worry, you will receive the full amount of the contribution that was withheld. - Pay retroactive taxes because savings through the provident fund can be used to reduce taxes.
Therefore, if we withdraw from this fund, it is considered that we are in breach of tax conditions and we must also pay retroactive taxes. - And once you leave the Provident Fund, you may not be able to go back in immediately, or you may have to wait for a period of time, depending on the company’s fund regulations.
In case of changing companies, it is not necessary to sell the Provident Fund, but you can hold it to move to a new company. Or if you stop being a company employee, you can move to an RMF that is a Provident Fund.
“Working people can also have millions in savings by saving through the Provident Fund.”
Provident funds are another channel and method for saving for the future of working people in retirement because it is a matter of voluntary.
Therefore, if the company allows us to do it but we don’t do it, we don’t apply to be a member of the provident fund, it is a big mistake. What we should do next is to try to look back at the provident fund policy of our company to see how many percent of the salary they currently allow us to deduct and how many percent the company will match up to.
Just by choosing to deduct a higher percentage of salary, we have the opportunity to have millions or even millions faster.
And with this method, we will definitely be able to retire happily. Or we can say that “Happy Retirement Provident Fund can help.”
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