Experts debate options for reforming and improving Thailand's pension system

The International Labour Organization (ILO) held a seminar to assess Thailand’s future pension system.

Press release | BANGKOK | 23 August 2016
Bangkok (ILO News) - A seminar on options to reforming and improving Thailand’s pension system, held in Bangkok by the International Labour Organization (ILO), gathered national and international experts on pension reform. It offered an opportunity to share with national stakeholders the latest developments on the global pension debate, including lessons from countries in the region, around the world and from the analytical work the ILO has been doing in the area of pensions.

It also provided an open forum for national stakeholders to discuss the preliminary findings of the report Systemic Review of Thailand’s Pension System – Exploring Options for Reform and Improvement, wherein various options for the future of the Thai system will be assessed. These various options are expected to be grounded in solid quantitative data and incorporate the lessons learnt from various sources.

“The seminar was an important contribution to further elicit national dialogue on pension reform. ; It also provided opportunities for knowledge exchange and review of good international practices in a area of work which requires close attention by Thai policy makers.” said Mr. Maurizio Bussi, Director of the ILO Country Office for Thailand, Cambodia and Lao People's Democratic Republic.

M.L. Puntrik Smiti, Permanent Secretary, Ministry of Labour, said: “The seminar is timely. Thailand is facing the pressures of an ageing society, what is actually a global challenge and it's important to learn also from other countries experience. The government is considering the ILO recommendations to review the existing legislation to adjust contribution rates in particular the pension scheme under the SSO. The overall reform of the (pension and social protection) system is necessary for Thailand.”

Thailand is a regional reference in the area of social protection for its thoughtful and gradual extension of its welfare system. . From an earlier stage, the ILO, the United Nations agency dealing with work and workplace issues, has been a closely engaged partner of the Government of Thailand in this process. More recently the ILO has been involved in the actuarial valuation of Thailand’s Social Security Office (SSO) and the schemes under its admiration. The conclusions of the actuarial study clearly show that in order to assure the long term financial sustainability of the system its parameters need to be gradually changed in keeping with evolving demographic realities and inter-generational solidarity principles.

In the field of pensions the longer the delay to adjust parameters the more drastic solutions which may be needed in future. “The ILO is aware that these decisions are not easy, but these are the kind of necessary decisions that need to be taken to guarantee the sustainability of the system and the welfare of its beneficiaries in the future. The good news emerging from the actuarial report is that no drastic reform are necessary and a gradual approach based on parametric adjustments (retirement age; contribution rate) could bring the system to a desired level of effectiveness and universal outreach.” said Mr. Bussi.

From long international experience, the ILO has witnessed how countries facing similar challenges opted to shift from a social insurance model (the one used by SSO) to models grounded in individual mandatory savings accounts (Defined Contribution or provident funds). Countries today are increasingly aware of the risks of these models with regard to their exposure to investment failures, excessive management costs, limited adequacy of benefits, limited pooling of risks and the significant transition costs involved in switching from Defined Benefit to Defined Contribution schemes.

For more information please contact:

Mr Nuno Meira Simoes da Cunha
Social Protection Specialist
ILO Decent Work Technical Support Team for
East and Southeast Asia and the Pacific
Tel: 02 288 1767
Email: cunhan@ilo.org

Jittima Srisuknam (Ms.)
Programme Officer for Thailand and Lao PDR
ILO Country Office for Thailand, Cambodia and Lao PDR
Tel: 02 288 1739
Email: Jittima@ilo.org