Thailand is weighing a plan to raise the retirement age to 65. Analysts say that as the severe low birth rate and aging population reached a level that threatened fiscal soundness, they eventually took out the “extension of retirement” card.
According to the Bangkok Post on the 18th, Thailand’s Ministry of Labor said it is considering raising the retirement age to 65 and encouraging voluntary retirement. The current retirement age is 60 for civil servants and public institution employees, and 55 to 60 for the private sector, but if the revision is passed, it will be 5 to 10 years higher.
“This is a measure to strengthen the financial capacity of the Social Security Fund (SSF) at a time when Thailand is entering a super-aged society,” said Pumpat Muan-chan, a spokesman for the Ministry of Labor. “The Minister of Labor, Pumpat Ratchakitpraghan, believes that sustainability should be considered as the fund is used not only for senior citizens’ pensions but also for medical security for the general public.”
The Thai Social Security Fund is Thailand’s largest public fund that functions similar to the Korean national pension. 24 million out of 71 million people have signed up. The Bangkok Post reported that the government, including the Social Security Administration (SSO) under the Ministry of Labor, is also considering raising the starting age for annual benefits from 55 to 65. Thailand is considered one of the most aging countries in the world. According to the World Bank, life expectancy in Thailand as of 2022 was 79.6 years, up more than seven years from 2000 (72.3 years). It is expected to become a super-aged society by 2027. The U.N. classifies a country as an aged society if the ratio of people aged 65 or older is 14 percent or higher, and a super-aged society if it is 20 percent or higher. Korea entered a super-aged society in December last year.
On the other hand, Thailand’s total fertility rate (the number of children a woman is expected to give birth to in her lifetime) was 1.0, showing a rapid decline. It was classified as an ultra-low fertility country along with Korea (0.75 children) and Singapore (0.97 children), according to local media Kao Sot.
The low birth rate and aging population are putting pressure on the national finances. The Thai government believes that if the government does nothing, the social security fund could be depleted within the next 30 years. In other words, the retirement age and the timing of receipt are gradually delayed to delay the depletion of the fund. The local Ministry of Labor also aimed to raise the return on the operation of the social security fund from 2.3 to 2.4 percent as of 2023 to at least 5 percent this year. The situation in neighboring Southeast Asian countries such as Vietnam and Singapore is similar. As the country grows rapidly old after industrialization, concerns over slowing growth are popping up everywhere. Vietnam’s total fertility rate last year reached a record low of 1.91 people, and the elderly population is expected to grow rapidly and enter an aging society in 2039, Vietnamese news media said last month. “Demographic changes will lead to labor shortages and accelerate economic and social burdens.”
JULIE KIM
US ASIA JOURNAL
