Global Pension Index 2021: Dip in household savings sees slight decrease in Thailand’s overall index value

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By Adam Judd

 

Thailand, November 9, 2021 – The overall index value for Thailand’s retirement system dipped slightly from 40.8 in  2020 to 40.6 in 2021, according to the 2021 Mercer CFA Institute Global Pension Index (MCGPI)1. Into its 13th edition,  the 2021 Global Pension Index measures 43 retirement income systems across the globe through three weighted sub-indices (adequacy, sustainability, and integrity) and includes four new systems – Iceland, Taiwan, UAE, and Uruguay.  Thailand is ranked 43rd in this year’s study, with the lowest index value globally. 

 

The slight decrease in Thailand’s overall index value was primarily due to a decline in the country’s household savings rate. However, this year saw an increase in the integrity sub-index score, which improved 2.7 points from 47.3 in 2020  to 50 in 2021. Thailand’s integrity score was also the highest across each of the sub-indices measured, followed by sustainability (40) and adequacy (35.2). 

 

Overall, Thailand is ranked 35th for the sustainability sub-index, which measures the likelihood of the Thai system’s ability to provide benefits in the future; 39th for integrity, where factors that affect the citizens’ confidence level in the system are considered; and 42nd for the adequacy sub-index, which considers how the country’s system is designed to provide adequate retirement benefits.  

 

Kasin Sutuntivorakoon, Mercer’s Wealth Business Leader in Thailand, said: “The government and regulators, as seen by the proposed establishment of the National Pension Fund (“NPF”) and the pending Provident Fund reform measures, have been commendable in taking active steps to tackle Thailand’s issues with our aging population and relative lack of retirement savings. While the approval of the NPF could plug some gaps, the timeline of enactment remains unclear. In the short run, Thailand can do more to improve the overall index value by enhancing governance measures and expanding investments in growth assets. 

 

The MCGPI is a comprehensive study of global pension systems, accounting for two-thirds (65 percent) of the world’s population. It benchmarks  retirement income systems around the world highlighting some shortcomings in each system and suggests possible areas of reform that would  provide more adequate and sustainable retirement benefits, innovative investment designs, integrated mortality pooling solutions, retirement income programs, and enhancement of user experience.” 

 

Mary Leung, CFA, Head, Advocacy, Asia Pacific, at CFA Institute, said, “While Asia has fared relatively well compared with most other regions during COVID-19, there is no market in Asia that doesn’t need urgent pension reforms. We have been operating in an extremely challenging environment with historically low-interest rates and, in some cases,  negative yields clearly impacting returns. Policymakers and industry stakeholders must take collective action to ensure  the adequacy and sustainability of retirement benefits.” 

 

Thailand retained its D-grade, connoting a pension system that has some desirable features but its efficacy and sustainability are in doubt if major weaknesses or omissions are not addressed. The Thai system was awarded the same grade as a number of Asian countries like India, Japan, South Korea, and the Philippines. 

 

Full story: https://thepattayanews.com/2021/11/10/global-pension-index-2021-dip-in-household-savings-sees-slight-decrease-in-thailands-overall-index-value/

 

-- © Copyright The Pattaya News 2021-11-10

 

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