Many workers ill-prepared for old age
published : 7 Feb 2023 at 07:00
newspaper section: Business
writer: Wichit Chantanusornsiri
Finance Minister Arkhom Termpittayapaisith is concerned that more than 16 million informal workers have yet to participate in any savings scheme to prepare for life during retirement, even though Thailand is expected to become an aged society in the next two years.
He said that Thailand is now an ageing society as at least 10% of the population has been 60 years old or more since 2005. A total of 12.5 million people, or 19% of the population, is currently over 60. Thai people are also enjoying a longer life span.
Mr Arkhom added that the country is expected to become an aged society in the next couple of years when elderly people will surge to 20% of the total population. It is set to become a super-aged society in 2034 when the elderly proportion of the population reaches 28%.
He urged all Thais to build up long-term savings to ensure they have sufficient money during retirement.
Mr Arkhom said there were a huge number of informal workers who have yet to enter a savings scheme for retirement. It was revealed in 2022 that only 13.4 million of the overall 29.5 million informal workers were utilising a savings scheme for their retirement.
Of those participating in a scheme, 10.9 million are under Article 40 of the Social Security Act, with the remainder members of the National Savings Fund (NSF). This suggests the other 16.1 million informal workers, or 55% of the total, have yet to enter any savings schemes, Mr Arkhom said.
The Finance Ministry has tried to make the NSF more attractive to informal workers. Last month the cabinet approved an increase in the government's NSF contributions, up to a maximum of 1,800 baht per year for members of any age.
The cabinet also agreed with the ministry's proposal to increase the maximum amount members are allowed to save to 30,000 baht per year, up from 13,200 baht.
The government's current contribution to the fund varies depending on a member's age.
For example, for members aged between 15-30, the government pays 50% of their contribution, but no more than 600 baht per year. For members aged 50-60, the government pays 100% of their contribution, but no more than 1,200 baht per year.
The changes approved by the cabinet are meant to ensure fund members retire at 60 with a monthly pension income of 12,000 baht, up from the current average of 5,000 baht. Mr Arkhom said earlier that this estimated pension increase is based on the assumption that members would start saving from the age of 15 and make contributions until they were 60. Members would also have to make the maximum contribution of 30,000 baht every year.
Mr Arkhom said the ministry has also promoted the employment of over-60s by letting their employers enjoy a tax deduction worth double the size of the wage they pay them. However, the wage to be calculated for the deduction must not exceed 15,000 baht.