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Tuesday, December 6, 2022

Aging Thailand needs pension reform


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Thailand must be prepared for a rapidly aging population and the need for pension reform for the elderly.

Thailand spent 750 billion baht or 4.43 percent of GDP on elderly care last year, up from 430 billion baht in 2013. Pornchai Tiravet, director of the Office of Fiscal Policy, said this and added that it is a sign that the country’s population is rapidly becoming an aging society.

As of 2021, 19 percent or 12.5 million of Thailand’s 66.7 million population was over the age of 60. More than 20 percent of the population is expected to pass the 60-year mark this year, and that number is expected to rise over 28 percent by 2033.

As the number of working-age people declines, Pornchai said, tax revenues will also fall significantly and the cost of caring for the elderly will rise. He added that the government will soon spend up to 1 trillion baht on social security and pensions.

Consequently, he said, so that the elderly do not become a financial burden on the state, the government should take measures such as:

Creating a savings and social security system for the elderly so that people have enough money after retirement.

Revolutionize the labor market to compensate for fewer workers, allowing seniors to continue working.

Improving the efficiency of tax collection and expanding the tax base both directly and indirectly.

He said the government should also support voluntary savings through the Pension Mutual Fund, the Super Savings Fund, and retirement life insurance.

Pornchai also attributed the rising costs to inefficiency. He said there is no single agency in Thailand responsible for setting common policy or creating a central database for the pension system. Consequently, the Fiscal Policy Authority is pushing for the creation of a national committee that will set pension scheme policy and coordinate with the savings funds. A central database of pensioners will also be established to ensure efficiency.

The Thai Cabinet approved the creation of this agency last year, and the State Council is currently considering a bill.

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