Post by AyG on Apr 5, 2016 10:00:33 GMT 7
Just read a short piece about the National Savings Fund (a voluntary pension fund for non-formal workers). It's got me worked up. The fund is largely aimed at the poorest (and almost certainly least financial literate) in society. You'd expect it to be designed to benefit them. I'm far from sure it does. However, first the good points:
Now for the bad part: the investment approach (bearing in mind that some people will be investing for up to 45 or 50 years):
My gripes:
As the prolific quote writer "Anon" once said: "A nation's greatness is measured by how it treats its weakest members". 'Tis true.
www.bangkokpost.com/business/news/921501/nsf-strives-for-1-8-return
- It encourages regular, monthly savings, with a very low minimum (50 baht)
- Part of the contribution is topped up 50% by the government, with maximum top-up of 600-1,200 baht/year, according to age.
Now for the bad part: the investment approach (bearing in mind that some people will be investing for up to 45 or 50 years):
- 60-70% of investment will be in bank deposits, with the balance in BBB- and better bonds
- The target investment return is 1.8% before charges, with a likely return (after charges) of less than 1.5%/year.
My gripes:
- The investment will not keep up with inflation, so the future pensioner is in effect losing money
- With such a long time horizon it would be appropriate to include investments with a near certainty of beating inflation
- If downside risk is a serious concern, structured products could have been used to protect capital
- 0.3+% charges for putting money into a few bank accounts? Excessive.
As the prolific quote writer "Anon" once said: "A nation's greatness is measured by how it treats its weakest members". 'Tis true.
www.bangkokpost.com/business/news/921501/nsf-strives-for-1-8-return
Harsh to say that but many do do nothing. Future planning is having kids. So at least this scheme is a start.
