Why Provident fund is the best job welfare benefits offered to employees?

Talking about job welfare benefits aside from Social Security Fund, employees might think of performance bonus, life & group health insurance, annual health check or any other financial supports for personal needs. One of job welfare benefits that employer should not overlook is provident fund that would employees saving up money to make sure that they will always have reserved money when they reach their retirement.

Provident fund is one of the jobs benefits that employee considers before making decision to join the company. The reason is provident fund is the primary source of income after retirement. The provident fund also acts as a long-term saving method that comes from the amount deducted from employee salary plus the amount which are paid by company. Both employees and employers can receive tax benefit of their contributions.
Therefore, many companies are setting up provident funds to motivate employees to stay with the company longer and to attract quality candidate to join the company.

For employers who wish to establish provident fund for their employees refer to the following process:

Asset Management Company Selection: finding asset management companies that offer provident fund management and asking for their investment proposal for comparison. Asset management companies will present their past performance, comparing performance to market benchmark and other services that need to be considered.

Select Asset Management Company & Review Regulation: after choosing asset management company and decide to establish the provident fund, appointed asset management company will help setting up terms and conditions for the fund, for example, payment, appropriated employees’ and employer’s contribution rate, fund’s investment policy that suitable for employees then authorized person signs and return agreement to asset management company. For the "agreement period", we suggested that it should not be too short to prevent fund management company from focusing on short-term performances and losing opportunities in the long term. From the management company's perspective, the better the return, the more likely contract to be renewed. Thus, when the contract period is too short it may lead to a higher investment risk than it should be.

Appoint asset management company submit documents and regulations to SEC for approval: while waiting for SEC approval, the company should ask fund management company to provide investment information about "Provident fund" to employees within the organization.  It is crucial for the company to provide clear understanding to their employees when establishing provident fund because the company will need the employee’s cooperation. Employees are obliged to pay contributions to the provident fund, along with their employer's contributions, meaning that this kind of welfare is not another gratuitous grant, but the employee must also be co-pays. Therefore, if employees have better understanding of the benefits of how provident fund can provide welfare as well as security to employees and encouraging them to save for their own benefits. Then there will be no resistance to the establishment a provident fund. 

Assign a person who is responsible for deposit employees’ and employer’s monthly contributions to provident fund So, Asset Management Company will be able to process next step. According to the regulations, employers are required to send their contributions to the fund within three business days after the salary are paid to avoid any unexpected to circumstances. Asset management company shall provide updated provident fund report twice a year to fund members which include fund’s holdings, proportion of each holdings and fund’s performance.

Principal Asset Management understands the needs of fund’s members since members have diverse investment characteristics and risk level acceptance. Consequently, Principal asset management has been providing fund’s members with multiple investment policies to broaden the choices for fund’s members and for fund’s members to reach their investment goal easily.

Principal Target Date Fund which offers strategic asset allocation to fund’s members, which adjusted investment by member's age. The fund manager will arrange the appropriate long term investment portfolio. For example, when member ages is closer to retirement age, the fund manager will adjust portfolio to invest in asset that has lower risk compare to members who are younger. Moreover, Principal use Rebalancing Portfolio technique to ensure members invest in asset that has appropriate risk according to their age which the members do not need to adjust their portfolio.

To reduce short term volatility, Principal asset management also provide Tactical Asset Allocation by adjusting weights of investment for each asset class to match short term investment situation. Therefore, the investment portfolio has a higher expected return with reduced risk.

Principal Asset Management also has “Target Risk Policy” for members who wish to select assets class on their owns. However, fund members shall choose the appropriate investment plan and asset allocation to suit their age and appropriate level of investment risk. Investors must be aware that they may receive a lower return when the financial market is volatile. Thus, they must always active and recheck their investment plan.

Principal Asset Management has provided a service called “Plan WISE Retire WELL” which allows anyone to plan their retirement by filling out your information such as contribution rate. Then, you will know the expected amount money you will be getting on your retirement date. This will be useful for everyone who needs help on retirement planning. Additionally, Principal Asset Management has mobile application called “Principal PVD” which allows fund members to plan their retirement and access all investment funds anywhere and anytime.

For more information, please click here https://www.principal.th/en/provident-fund

Contact us at https://www.principal.th/en or call 02-686-9595

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Disclaimer:

Investors should understand product characteristics (mutual funds), conditions of return and risk before making an investment decision.

Past performance of the fund is not a guarantee for future performance.

Plan WISE Retire WELL is only an investment model to study the possibility of expected return only. It is not a guarantee of future returns.