The government is set to raise the retirement age for state officials to 65 from 60 to alleviate state outlays for pensions as the country is transforming into a grey society.
The move requires amendment of the 65-year-old Pension Act, which caps the retirement age at 60, said an informed source at the Finance Ministry.
The Office of the Civil Service Commission is expected to seek cabinet approval for the amendment next month, the source said.
The change helps the government save on pensions and cost for new staff recruitment.
Some 30,000 state officials reach retirement age each year. State officials, excluding permanent employees, total 1.7 million.
The source the government budget for the retirement safety net was estimated at 680 billion baht, or 3% of GDP in 2026. Of the total, 470 billion will be used for state officials' pensions and the remainder for old age allowance and contributions to the Social Security Fund (SSF) and the National Savings Fund (NSF).
Somchai: Reform or face fiscal crisis
The fiscal burden for the retirement safety net in 2014 amounted to 270 billion baht, 2.1% of the GDP, with 140 billion of the total for pensions.
The state offers a Government Pension Fund, a non-contribution pension for state officials; the SSF, which provides a living allowance for the elderly; and the new NSF, which provides retirement pensions to self-employed workers. It also offers a monthly allowance for the elderly starting from 500 baht, depending on age.
The government is liable for unpaid contributions worth a combined 98.4 billion baht during the fiscal years 2012 to 2016 to the SSF and has agreed to pay 19.7 billion a year for five years, starting from next fiscal year. This will add 0.6-0.7 percentage points in additional burden to the annual budget.
The number of people reaching retirement age is projected to reach 17.5% of the total population in 2020, 21.2% in 2025, and 25.2% in 2030, compared with 14% at present.
Somchai Sujjapongse, permanent secretary for finance, said without reform the next 10-15 years, the country could face a fiscal crisis from the burden incurred by an ageing society.
Deputy Finance Minister Wisudhi Srisuphan said last year the ministry will limit funding for retirement schemes to a maximum of 3% of GDP, though the amount is expected to rise rapidly. A growing GDP will allow it to stick to the 3% limit, he said.
Samruam Chalermthong, 63, still drives a tuk-tuk every day from 4am to 6pm. The government is poised to amend a law extending the retirement age for state officials to 65 from 60 as the demographics point towards an ageing society. PATIPAT JANTHONG