Thailand is considering reforms to the Social Security Fund (SSF) to enhance its sustainability, according to local news website The Nation, quoting Phipat Ratchakitprakarn, labour minister of the Southeast Asian country.
He pointed to a 2020 study by the International Labour Organisation and the SSF which found that the fund could be insolvent by 2054 as the gap between income and expenditure widens because of an ageing population and expansion of benefits.
He says his ministry has outlined four potential strategies to avert the crisis, including extending the retirement age.
He says discussions are underway to increase the retirement age to 65 years from the current 55.
“Any increase in Thailand would be phased in gradually over the long term,” Phipat is quoted as saying in the news report published on May 7.
The three other potential strategies are higher contribution rates, expansion of the wage ceiling for contributions, and closer collaboration between the SSF and key stakeholders in formulating policies.
Phipat says the labour ministry’s actuarial assessments suggest that contributions rates may need to rise to as high as 20.2% in order to ensure the SSF’s sustainability for the next 75 years.
Employees have to currently contribute a sum equal to 5% of their salaries up to a maximum 375 baht (US$11.48) to the SSF every month, with the government contributing an equal sum.
Phipat also says his ministry is in the midst of reforming the SSF's governance structure, aiming to eliminate direct control by the civil service.
“The goal is to establish an independent body managed by professionals, allowing for greater operational flexibility and service efficiency,” he says.
Spokespersons for the labour ministry did not immediately respond to questions from Asia Asset Management.