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Published on March 8, 2008

Called "Thai Society's Perspectives on Saving for Retirement", the seminar, organised by the Government Pension Fund (GPF), invited experts from government, academia, business management and medical fields to provide views on the subject.

All of the speakers voiced concern that many Thais remain financially, physically and mentally ill-equipped in dealing with retirement. Compounding the problem is a rapidly ageing population.

Previously, researchers and economist at the Bank of Thailand issued warnings that a large majority of Thais did not have access to financial products, nor did they understand how to use the many available options.

Since the local birth rate has stalled and more people are living longer, the government needs to make retirement planning a national priority, said Kobsak Pootrakul, director of the Stock Exchange of Thailand Research Institute.

According to recent research commissioned by the GPF, the elderly now make up about 10 per cent of the populace.

The number will rise to 15-20 per cent over the next 20 years if trends continue.

This means that the seven working adults now supporting a retiree will be reduced to four by that time.

Without any changes, in 40 years the number could be two working adults supporting one retiree.

Professor Kua Wongboonsin, a population scholar and vice president of Chulalongkorn University, said each family needed to bear two children for society to cope with the ageing population.

The system to support retirement planning appears to be disproportionate, he said.

There are three columns of support for retirees: Social Security; mandatory pensions or provident funds; and voluntary provident funds, said Premrudee Sawittachart, executive consultant at TMB Asset Management.

She said Social Security simply could not be the ultimate resort for retirees.

"It is meant to be a safety net," she said. "The mandatory pension fund will ensure people have the basic means to survive post-retirement. But voluntary investment in long-term equity funds and retirement mutual funds will allow them a comfortable life."

Thailand is one of the few developing countries not to have a mandatory pension or provident-fund scheme, said Wisit Tantitsunthorn, secretary-general of the GPF. Its absence stretches the role of the Social Security system.

While some critics say the move is "too little too late", local authorities should note that places like Hong Kong have implemented forced retirement-savings schemes with great success since 2000.

What the GPF research shows is that far too many people are ignorant about pension plans.

Despite the current 5.4-per-cent inflation rate, 61 per cent of people still assume that bank savings accounts carry the lowest risk, said Suwanee Surasiengsunk, deputy director of Chulalongkorn University's College of Population Studies.

They do not seem to realise that with such low returns from bank deposits, the value of their savings are actually eroded at an alarming pace.

Ki Nan Tsui

The Nation