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Published on October 2, 2007

Monetary Policy Group division executive Kobsak Pootrakool and economist Anuk Serechetapongse highlight in their recent research report that the population of those over 60 will grow from 9.4 per cent of the population in 2000, when they were last counted, to 30 per cent in the next two decades.

This means significant policy changes must be carried out, which may involve significant cutbacks on benefits, or even no benefits at all as entitled for young Social Security members, said the Bank of Thailand (BOT) economists.

The report, which will be presented at the BOT's Symposium 2007 tomorrow and Thursday, suggests the government will have to bear a financial risk if this problem is not addressed systematically and proactively.

From the study's microlevel data, the elderly population faces a series of constraints, namely their dependence on immediate family members for support. Although some may rely on income from working past retirement age, such income will be insufficient. A lack of savings among the elderly will only worsen their chance of a comfortable post-work life.

It is a double whammy in that the projected fall in the proportion of the working age to the elderly population will add to the burden of working adults. It is also a catch-22 scenario in that these young professionals' incomes will be used to pay for the care of their parents and other older relatives, diminishing the amount they could invest for their own retirement plans.

Kobsak and Anuk want to stress the need for effective policies and the sharing of "longevity risk". These can be achieved, so the economists believe, through adequate incentives to encourage people to retire at a much older age as life expectancy increases.

In a parallel measure, policy-makers must search for innovative alternatives to reform and promote long-term savings. This will add to the nation's tenacity in the face of imminent demographic changes.

The Nation