Achieving pension adequacy remains a major challenge for pension funds in Asia, according to panellists at a panel discussion organised at a forum by Asia Asset Management and Brunei Institute of Leadership and Islamic Finance (BILIF).
Songpol Chevapanyaroj, secretary general of Thailand’s Government Pension Fund (GPF), said one of the challenges the fund is facing is the rising life expectancy of its members.
He noted that GPF members retire at the age of 60, and have a life expectancy of 80 years old, adding that with advancement in healthcare technology, life expectancy is expected to continue to rise.
According to data from The Global Economy, life expectancy in Thailand in 1997, the year when GPF was established, was 68 years. By 2022, it had grown to 79.6 years.
“So, we are encouraging our members to save more, and we are also challenging ourselves to improve our funds’ returns,” he said.
Rentony C. Gibe, senior vice president of fund management group at Philippines’ Social Security System, said that the fund implements a very “structured” investment strategy that has allowed the fund to weather market volatility over the past few years.
He said the fund allocates 50% of its assets to government securities, 20% to capital markets equities and corporate bonds, 15% to member loans, 10% to real estate and 5% to money markets.
“Because of the investment structure, we have weathered market uncertainty over the past few years. I am quite confident that with our conservative investment strategy, we will be able to navigate the future and cater to the needs of our members,” Gibe said.
Ibnu Shahrinuddin Ibrahim, deputy managing director at Brunei Darussalam’s Employees Trust Fund, said the fund understands the need to improve the adequacy of its members’ retirement savings.
He said the fund had embarked on a reform in 2023, which had resulted in its members’ retirement savings being split into two accounts – one that allows lump sum withdrawal, while the other is for a monthly annuity.
Before the reform, only two out of 1000 members received a monthly annuity of at least B$250 (US$195.11) a month until they reach the age of 80. With the reform, seven out of ten members now receive an annuity of at least B$250 a month.
“This is a major milestone for Brunei Darussalam,” he said.
