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publication June 22, 2021

Pension Provision in Thailand

Pension Provision in Thailand

Key Findings

This report analyzes the current state of pension provision in Thailand and proposes options for reform that would increase the adequacy and sustainability of the pension system. 

  • Thailand has a rapidly aging population but only around a third of the working age population is covered by a pension scheme.
  • Among those that are covered, only public sector workers will be able to smooth their consumption effectively without additional voluntary retirement saving.

The role of pensions in providing income support to the elderly in Thailand is very limited.

  • The government has expanded a social assistance scheme targeted to the elderly over the last two decades and as of 2018 paid a very low benefit to around three quarters of the population aged 60 and above.
  • More than three-fourths of Thais aged 60 and above reported that their main source of income was work or family support. Only around 5% reported pension income as the main source of support.
  • The Old Age Assistance program has high coverage but the benefit that it pays is by itself not sufficient to avoid poverty among the elderly who will have to continue to work and/or rely on their children.
  • The limited role of pension provision contrasts with the number of mandatory and voluntary pension schemes that have been introduced over the years

The report makes the following recommendations to improve pension system effectiveness

Immediate reform:

  • Increase the social pension level and index it to inflation
  • Make parametric adjustments for both the Social Security Fund (SSF) and the defined benefit scheme for public sector workers.

Medium-term reform:

  • Create the digital infrastructure and integrated registry that will facilitate an effective target regime appropriate recordkeeping infrastructure and design a more effectively targeted regime of contribution subsidies to gradually achieve universal coverage as is already the case in health insurance 

It is also important to assess the pension system in terms of its broader impact on fiscal sustainability and national savings.  This analysis can be found in a companion World Bank report that looks at the Macroeconomic and Fiscal Impact of Aging in Thailand.