Older and wiser: The promise of a grey future
The elderly should be the beneficiaries of the money saved by raising the retirement age to 65
The government is finally poised to implement a proactive measure aiming at coping with the rapidly ageing population. Unfortunately its motivation is purely fiscal and ignores the multitude of issues starting to emerge as Thailand becomes a “grey society”.
The Office of the Civil Service Commission will next month seek Cabinet approval for an amendment to the Pension Act that would raise the mandatory age of retirement to 65 from 60.
Countries around the world are making similar adjustments. In Singapore the retirement age is now 62, in Britain and Germany 65, and in the United States 66. The same rationale applies in all cases: birth rates are in decline, resulting in older populations, with the attendant public costs in healthcare and pensions. The longer people keep working, the longer they contribute to the economy rather than drawing on it, and the less it costs governments overall.
Thailand’s Pension Act is also elderly, enacted 63 years ago, at a time when no one could have foreseen the dramatic demographic shift now occurring.
The OCSC has good reason to worry. In 2014 – the most recent year for which such figures are available – from a social “safety net” worth Bt270 billion, representing 2.1 per cent of gross domestic product, the government paid out Bt149 billion in pensions. That percentage is expected to rise to 3 per cent of GDP in 2026 – Bt470 billion. In the corridors of government alone, some 30,000 out of 1.7 million officials reach retirement age each year.
It’s laudable that governments want people to have the choice to work longer, but the logic at work is merely pecuniary – saving money, including the costs associated with recruiting replacement staff. It’s also short-sighted, a matter of spending a still-huge amount just to buy time. In the longer term, the vast costs of caring for an aged population will be unavoidable.
Thailand is already in the process of transforming into a grey society. The government would do far better to devise ways of channelling the experience and talents of citizens age 60 and up into areas where they’re most needed. It would not only make full use of essential wisdom and skills but also enable those citizens to maintain a level of dignity that is too often denied seniors, who are otherwise shunted aside by families and employers. It’s common for retirees to slump into depression amid feelings of uselessness. The social safety net should be guarding against that, too.
Raising the retirement age must be handled with a comprehensive plan in mind. The private sector is already astute at tapping the experience of senior employees and it’s to be hoped that a higher retirement age would encourage more workplaces to do the same, since such skills and wisdom cannot be supplied by younger staff. The government should earmark areas in the workforce best suited to older people, such as in teaching, to name the most obvious example.
At the same time, it needs better plans in place for those who cannot keep working until they’re 65, and for also those who choose not to keep working and yet also require state assistance at some level. The law should be flexible enough in structure to accommodate the wishes of all.
It’s important to realise that a seemingly minor change being made now will have far-reaching effects. The future, at least for the balance of this century, belongs to our senior citizens. In just two decades, one out of every four people will be a senior citizen. They will require government support provided in sustainable fashion. Simply looking for ways to cut costs as we move in halting steps from the present to the future is not the right approach.