Thailand’s pension system is in crisis, with no easy solutions in sight
Thais over 60 make up about 21 per cent of the population, proportion expected to rise to 38.5 by 2050. On average, they get 600 and 1,000 baht (US$ 16-28) per month, but changes proposed by the former military-led government and the current progressive opposition are deemed inadequate.
Bangkok (AsiaNews) – Thailand’s new government, which took office at the start of the month, has a number of priorities, including a long-term solution for the country’s ailing pension system.
Integrating various pensions and funding schemes is crucial, notes the Puey Institute for Economic Research in a recent study, titled “Thailand’s Pension Reform: Towards an Inclusive, Adequate and Sustainable Pension System”.
The study highlights the need to take into account working careers that often alternate between formal and informal employment and assesses the different ways of financing future pensions and the varying length of working life of Thais.
Currently, Thais aged 60 and over make up around 21 per cent of the population, but, according to the UN Economic and Social Commission for Asia and the Pacific (ESCAP), this is set to rise to 38.5 per cent by 2050.
The existing social security and insurance system is largely inadequate, starting from the basic pension, which provides only 600-1,000 baht (US$ 16-28) per month, depending on age.
Retired civil servants, military and police enjoy greater pension benefits, as do most employees in the formal sector who are required to pay into the Social Security Office Fund. If they leave the formal sector, they can continue to contribute to the fund.
Those employed in the informal sector can opt into voluntary public or private schemes.
The need to restructure the pension system is not yet very visible because in Thai society children traditionally support parents in their old age.
This was before life expectancy rose, fertility dropped, and families became smaller, which now risk undermining senior citizens’ financial autonomy. A public scheme seems increasingly a must to avoid a crisis.
The former military-led government had pledged to guarantee a basic pension only to the poorest Thais, but that proved to be controversial.
The opposition took up the proposal put forward by the Phak Kao Klai (Move Forward) party, which had come close to leading the country after last May’s parliamentary elections.
Their idea was to provide a universal monthly pension of 3,000 bath, but it was rejected as too costly. Other proposals are being vetted, like hybrid schemes or fewer beneficiaries.