Labor Minister Suchart Chomklin has dropped his plan to extend the retirement age from 55 to 60. However, many experts are warning that the Social Welfare Office’s pension fund (SSO) could collapse before long if drastic changes are not made!
The International Labor Organization (ILO) has long warned that the fund could run out of cash by 2054 if the applicable rules do not change. However, since 1988, the life expectancy of Thai people has been gradually increasing. Thailand is becoming an aging society. As the population ages, more funds will be needed. Unfortunately, at present, the financial resources are about 1.98 trillion Baht.
In order to prevent the funds from running out, changes must be implemented.
Puey Ungphakorn , senior researcher at the Institute for Economic Research (PIER) , said at a conference last September that the government could consider increasing the financial contributions of employers and employees to about 20 percent of their monthly salaries. In addition, a reduction in pension benefits should be considered and fund members should be encouraged to delay their pension payments.
Many countries have increased the age at which people can start receiving pension benefits. For example, in the U.S., the retirement age increases by two months every year to 67, although U.S. citizens can begin receiving payments at 62 if they wish.
SSO Secretary General Boonsong Thapchaiyuth said his office is well aware of the problems facing Thailand’s retirement benefit system. In fact, he had been planning incremental reforms to the fund since 2016 because he too foresaw what was coming.
The other way that the SSO has planned is to adjust the maximum monthly salary recognized by the social security fund.
Set at Bt15,000 for a long time, it would be raised to Bt20,000. When the salary ceiling is raised, the contributions of the members of the fund will increase accordingly, although the percentage will remain at 5% of their salary. Many people earn more than Bt20,000 a month, but their contributions do not exceed Bt750 because of the fund’s own limit. If the salary cap is raised, their monthly contributions will increase to Bt1,000. Under this plan, fund members will not lose any benefits because the higher their contributions, the higher their retirement benefits.
“We will go ahead with the changes,” Boonsong said. “But we have to push the changes gradually and in the right economic climate.”
While the problems with the SSO pension fund are deep and long-standing, many have blamed the COVID-19 pandemic as the main obstacle to finding solutions. Boonsong, for one, believes that making changes to the fund would be inappropriate in the current climate.