Thailand advised to raise retirement age

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Thailand advised to raise retirement age
SUCHEERA PINIJPARAKARN
THE NATION


Brigitte Miksa, head of international pensions at Allianz Asset Management.

BANGKOK: -- THAILAND SHOULD increase the average retirement age from 55 to reduce the government's pension expenditure, according to Allianz Asset Management.

In the Pension Sustainability Index 2014 compiled by Allianz, Thailand ranks the lowest, and the country is expected to have one of the greatest proportion of elderly people within 35 years, together with Taiwan and South Korea.

Thailand also had one of the lowest rankings for retirement income adequacy (the percentage of retirement payments compared with final salary), along with declining fertility and a slow replacement rate.

Brigitte Miksa, head of international pensions at Allianz Asset Management, said the adequacy index pointed to a risk of the living standards of retirees falling below a "living status" level, but from the point of view of sustainability, this is seen as a positive, as it imposes a limited burden on state finances.

However, if the poverty rate among the elderly becomes acute, the state may need to provide welfare assistance, which will increase the burden on public finances, and this will affect the sustainability of the pension system.

Rapid demographic change and challenging economic circumstances are putting pressure on the pay-as-you-go tax system of working-age people who are taking care their ageing family members in, Miksa said.

Thailand needs to reform its pension expenditures to cope with the demographic realities, and increasing the retirement age is one solution, she said.

She raised the example of Denmark, which raised the retirement age to 75 years to cope with an average life expectancy of 90 years. Thailand should do the same because Thais retire at 55 on average but their life expectancy is about 75 years, which means the government will have to pay for pensions for 20 years.

Apart from raising the retirement age, the country should introduce incentives to work longer, Miksa said.

To reform public-pension expenditure, the government should reduce the pension commitment to future generations by changing the calculations and entitlements. Pension benefits should be 20-25 per cent of total retirement income of middle-income earners.

Allianz has also suggested that Thailand increase private retirement savings.

In most of the world's pension systems, there are three pillars, social security pensions, employment-related pensions and retirement savings, and finally, personal private retirement savings. Stable and reliable pension systems need several pillars to balance risks.

Allianz says the sustainability of a pension system may not be enough. Many countries have focused on the adequacy of their pension systems. To do so, the government has to decrease benefit levels in the public system and strengthen funded pension systems and shift to defined-benefit pension plans.

Under this model, an employer or sponsor promises a specified monthly benefit on retirement. By contrast, a defined-contribution retirement plan is one in which a certain amount of money is set aside each year by a company for the benefit of the employee.

Miksa said the recently established National Savings Fund was an important step towards extending basic coverage to the approximately 25 million informal workers in the country.

Source: http://www.nationmultimedia.com/business/Thailand-advised-to-raise-retirement-age-30273718.html

-- The Nation 2015-11-26

[davehowden]

Newcastle fan??

[tonbridgebrit]

Thailand's problem is, is that there's going to be too many old people in the future, and not enough young people.
Well, surely, the solution is simple. If Thailand was to encourage it's own people to have slightly more children, then, a greaer percentage of it's people would be young in the future. Basically, the mass use of contraceptives has massively reduced the birth-rate, and this is causing the problem.

Europe is also going through a demgraphic time-bomb, and Europe is solving the problem by importing a whole load of non-Europeans. Actually, in Thailand's case, Thailand is importing a whole load of Burmese, Cambodians, and Laos people. So, in reality, Thailand shouldn't worry too much about having too high a percentage of people who are old, and not enugh young people.

[selftaopath]

From what I observe daily in our Isaan village I thought the retirement age was around 23 years old for males and about 35 for women.

[Rocceao]

Newcastle fan??

MacDonald's fan, followed with a 6 pint chaser of Guinness

[laislica]

In the UK the workers pay every month into the fund towards their retirement.

The government simply use the money for anything but pensions.

Then they have the brass face to say that it's an entitlement, not a right, that they don't have enough money...... If the money we paid went into a proper retirement fund, it has been calculated that by age 65 we would each have more than £900,000 in our fund!

Let's say we take 20,000 a year, that means we can live on 20k per year for 45 years, not counting the interest payments on the undrawn money!

Stop stealing pension contributions!

Edited November 25, 2015 by laislica

[laislica]

Thailand's problem is, is that there's going to be too many old people in the future, and not enough young people.

Well, surely, the solution is simple. If Thailand was to encourage it's own people to have slightly more children, then, a greaer percentage of it's people would be young in the future. Basically, the mass use of contraceptives has massively reduced the birth-rate, and this is causing the problem.

Europe is also going through a demgraphic time-bomb, and Europe is solving the problem by importing a whole load of non-Europeans. Actually, in Thailand's case, Thailand is importing a whole load of Burmese, Cambodians, and Laos people. So, in reality, Thailand shouldn't worry too much about having too high a percentage of people who are old, and not enugh young people.

bs - see above

[NongKhaiKid]

Newcastle fan??

She does look a lot like Mike Ashley !

[BigBadGeordie]

Newcastle fan??

MacDonald's fan, followed with a 6 pint chaser of Guinness

Same - Same

[shirtless]

In Australia the pension age is now 70, I think at 55 Thailand cannot afford it.

[SABloke]

In the UK the workers pay every month into the fund towards their retirement.

The government simply use the money for anything but pensions.

Then they have the brass face to say that it's an entitlement, not a right, that they don't have enough money...... If the money we paid went into a proper retirement fund, it has been calculated that by age 65 we would each have more than £900,000 in our fund!

Let's say we take 20,000 a year, that means we can live on 20k per year for 45 years, not counting the interest payments on the undrawn money!

Stop stealing pension contributions!

''... it has been calculated that by age 65 we would each have more than £900,000 in our fund!''

Calculated by whom...where is this calculation. Using your own figures (excluding interest) to get to £900 000 in the first place you'd have to be putting in an average of £20 000 a year working for 45 years for a complete non-entitlement pension worth £900 000. Are UK citizens really paying £850 (with governmemt matching 100%) a month into the government pension plan?

[AlexRRR]

In Australia the pension age is now 70, I think at 55 Thailand cannot afford it.

It is 67 if born mid 1952 and later, 65 for if born before..........but there has been rumblings of pushing it out to 70.

The insurance spokesperson is talking from a purely business point of view, Thai cultural living conditions differ from western countries like Australia.

I like to see these pen pushers trying to do manual work into there 60's and 70's there all mouth and have no sense of reality, very few guys i know in the building industry can still hammer away at 60 let alone 70.

If nations really want to lessen the burden on the system they should create a pension scheme for ever living person in that nation from birth or working age. The trouble in a country like AU is all the tax cuts available to wealthy people, introducing benefits that really arrant needed and in most cases vote buyers, proping up sick industries etc, in other words better managing of the tax dollars would be a great start.

[maoro2013]

In Australia the pension age is now 70, I think at 55 Thailand cannot afford it.

That is incorrect. The final age may be 70 but this is being phased in.

6 months is being added to the original, long standing, retirement age of 65 every few years starting from people born in 1952. Females have a l;ittle bit different treatment as they have had favourable treatment for a long time.

I am in the first batch of the change whereby my pension won't be paid until I am 65.5, born in 1952

[selftaopath]

Much could be done to economically assist the average Thai. Re: Social Security (as Western nations know it) I would venture to say most Thais do NOT pay into this fund.

[sendbaht]

Curious, how much do retired Thai's receive here each month on average?

I believe most of my neighbors never receive anything because they never paid into the system...around here they mostly do day jobs... but for the folks who did pay in how much do they receive each month...thanks!

[apetley]

Wifey's mum and dad get 500 bht each per month as their state pension.

[Mosha]

My mother-in -law get's the Princely sum of 800 Baht/month as her monthly pension. Hardly a bank buster.

[tom21]

In Australia the pension age is now 70, I think at 55 Thailand cannot afford it.

That is incorrect. The final age may be 70 but this is being phased in.

6 months is being added to the original, long standing, retirement age of 65 every few years starting from people born in 1952. Females have a l;ittle bit different treatment as they have had favourable treatment for a long time.

I am in the first batch of the change whereby my pension won't be paid until I am 65.5, born in 1952

had me worried for a sec. I thought I might of had to go back and start work again

[tonbridgebrit]

Thailand's problem is, is that there's going to be too many old people in the future, and not enough young people.

Well, surely, the solution is simple. If Thailand was to encourage it's own people to have slightly more children, then, a greaer percentage of it's people would be young in the future. Basically, the mass use of contraceptives has massively reduced the birth-rate, and this is causing the problem.

Europe is also going through a demgraphic time-bomb, and Europe is solving the problem by importing a whole load of non-Europeans. Actually, in Thailand's case, Thailand is importing a whole load of Burmese, Cambodians, and Laos people. So, in reality, Thailand shouldn't worry too much about having too high a percentage of people who are old, and not enugh young people.

bs - see above

I suggest you look at SABloke's comment, on how you came up with the £900,000.

What else ? You get a society where lots of people are simply not having lots of children, well, you will end up getting a society where about one-third of all people are over 60 or 70. That's going to happen. So, that means one-third of all people are collecing a pension. Another one-third are made up of people who are children, students, un-employed, sick, etc. That leaves the remaining one-third, this remaining one-third are the workers. It is the workers who are supporting the pensioners.

Remember, any pension system is about existing workers paying into the system, to pay for today's pensioners. When today's workers retire, well, they get their money from new workers. The system is NOT about "you work, put some food into tin cans, you stop working in the future, and you open up the tin cans of food you built up, that is your food for the future". It IS about "you work, you give food to existing old people, you retire, new workers hand out food to you".

What it all means is, society needs to have lots of people to work, in order to support old people. There's no way of getting round this. It gets a bit scary when in the future, some countries will end up having 40% or 50% of their population over 65 and collecting a pension. Its not going to work, something must give.

[DeepInTheForest]

"She raised the example of Denmark, which raised the retirement age to 75 years to cope with an average life expectancy of 90 years. Thailand should do the same because Thais retire at 55 on average but their life expectancy is about 75 years, which means the government will have to pay for pensions for 20 years."

Well, yesss, if Thailand did like Denmark and had its people work till 75, when they expire, that would certainly solve the pension-funding problem.

But this is regression to an earlier, more brutal time. Retirement was a concept that was fought for for centuries. It may be disappearing, and not just in Thailand, but in the developed countries. Is that what we deserve, and what is the promise of capitalism anyway? Given that we produce more goods and stuff than ever, shouldn't workers at least be guaranteed a retirement, assuming they live to retirement age?

Edited November 26, 2015 by DeepInTheForest

[soomak]

Remember, any pension system is about existing workers paying into the system, to pay for today's pensioners. When today's workers retire, well, they get their money from new workers. The system is NOT about "you work, put some food into tin cans, you stop working in the future, and you open up the tin cans of food you built up, that is your food for the future". It IS about "you work, you give food to existing old people, you retire, new workers hand out food to you".

What it all means is, society needs to have lots of people to work, in order to support old people. There's no way of getting round this. It gets a bit scary when in the future, some countries will end up having 40% or 50% of their population over 65 and collecting a pension. Its not going to work, something must give.

That may be true in your country, but not in all countries.

In my country, in the private sector (80% of the employees), employees & employers put money into a pension fund which is the employee's private fund.

When you retire, you either withdraw the entire amount which accumulated in your fund, or receive a monthly payment based on how much is in your fund, the life expectancy, etc. In other words: you get what you put in.

Government employees on the other hand receive a monthly payment based on their last salary and their years of employment. So there is going to be a deficit only in the public sector, unless the monthly payments are reduced or monthly deductions increase.

[GarryP]

Many Thai companies already announced the raising of the retirement age from 55 to 60 this year, in line with government policy. The government wants the private sector to match the government sector. People in the company I work for were very happy about the increase announced this year. None, of them said said they would be able to support themselves properly unless the retirement age was raised, giving them more time for saving. Me included. The extra 5 years will make sure I have enough money put away to look after myself until I die of old age (hopefully).

The 500 and 800 Baht other posters mention is not a pension per se but just an allowance paid to those of a certain age, whether or not they paid into the Social Security fund. Those Thais who paid in for the minimum number of years will have the choice of taking a lump sum or receiving a monthly payment upon retirement. The actual amount depends on how long you have been paying in. For those foreigners in the scheme, they have no option but to take the one off payment.

Edited November 26, 2015 by GarryP

[dageurreotype]

In Australia the pension age is now 70, I think at 55 Thailand cannot afford it.

This and comparisons with Northern European countries is all rather apples and oranges isn't it? 500 baht per month must surely form a very low percentage of GDP? And 'savings', very difficult on what the average Thai worker earns per day. Having said that, it would be a far better choice than the next installment on their new car.

[phoenixdoglover]

My mother-in -law get's the Princely sum of 800 Baht/month as her monthly pension. Hardly a bank buster.

Same for my 84 year old father in law. He was a farmer.

[impulse]

Reminds me of the old joke(s):

"The company would like to remind people who die at their work station to please fall over, so we can tell the difference between the dead and rest of our employees"

or:

"Anyone who doesn't believe in life after death shouldn't stand in front of the employee parking lot at quitting time"

[elgordo38]

In Australia the pension age is now 70, I think at 55 Thailand cannot afford it.

Apart from children sending money home to the parents and the measly 600 bahts a month seniors get what pension plan is there? Oh sorry forgot the generous pension plan plus benefits that government workers get. Forget about pensions world wide no one in the future will be able to afford retirement with the banks paying zero percent interest and most companies dropping pension plans like hot potatoes. They will not have to force people to "work till they drop" they will have to do so out of necessity

[bangkapi]

The problem with all of these retirement and pension schemes is that they are Ponzi in nature. Nobody has a plan for economic contraction nor carrying capacity or depletion of resources. Someone is going to be left holding the bag. But then again, that is the problem with all fiat currencies and not just the pensions.

[Krataiboy]

Brigitte Miksa, head of international pensions at Allianz Asset Management, said the adequacy index pointed to a risk of the living standards of retirees falling below a "living status" level, but from the point of view of sustainability, this is seen as a positive, as it imposes a limited burden on state finances.

So the prospect of millions of impoverished pensioners dying prematurely through hardship is "a positive"?

One wonders what Ms Miksa (who is due to retire in 2025, but presumably not on a pittance) would regard as a negative.

Edited November 26, 2015 by Krataiboy

[gandalf12]

Scrap a fixed retirement age, just make it optional. Then if people want to retire they can and received whatever benefits they are entitled to. If they prefer to continue working then they should be allowed to.

[Andreas2]

Ponzi schemes never ever worked!

It's the same here as everywhere else: The state fails to fulfil its contractual agreement as the scheme must go bankrupt.

Solution of the state: Break the contract and rise the retirement age. Then rise / use additional taxes. But eventually the scheme must implode.

Every private (even non-profit) enterprise with such a business model would immediately be declared as a criminal organisation.

It has nothing to do with any ethics or philosophy. It's just a fact: Ponzi schemes don't work. And yes, ponzi schemes are highly immoral, btw.

The sooner you stop believing in the state, its competence and its promises, the better for you.