Progress and key Challenges inThailand pension system: what canbe done to create sustainable andadequate pension provisions for all
Presented by Roongkiat Ratanabanchuen, Ph.D.

Current Thailand
Pension Structure

Proposals to solve
those challenges

Current pension challenges

Current structure of Thailand pension system•Pillar 1 – Protecting
against poverty lines
Pillar 2 – Mandatory
occupational pension
schemes••

Government
employees

SOE + Independentagency employees

Private employees/Formal sector

Old civil service
pensions
Pensions organizedby local authoritiesPensions or lump sum
organized by SOEs or
independent agencies

Lump sum provided byemployers under theLabour Protection Act

Government Pension
Fund (GPF)

Self-employed/Informal sector

Old age allowance
Social Security Fund(Article 33)•

Social Security Fund(Article 39/40)
National Saving Fund(NSF)

Pilar 3 – Voluntary
occupational pension
schemes

Voluntary Provident Fund (PVD)

Pillar 3 – Voluntary
personal savings

Retirement Mutual Fund (RMF)/ Super Saving Fund (SSF)/ Insurance life annuity products•

Defined benefit structure
Defined contribution structure
Presented by Roongkiat Ratanabanchuen, Ph.D.

Current ThailandPension Structure

Current pension challenges

Low pension coverage rate
Government
employees(~1.68 million)

Age < 15(~9.08 million)

Formal sector(~18.1 million)
Total
population(66.17million)

Age > 15(~57.09million)

Labor
workforce*(~38.70million)

Other formal
sectoremployees(~16.42million)

Informalsector
(~19.6 million)
Unemployed(~1.0 million)

Outside labor force(~13.99 million)
Studying(~4.4 million)

Informalsector +unemployed(~20.6 million)

Source: Data as of 2021, National Statistics Office; Office of the Civil Service Commissions;
Government Pension Fund; Social Security Office; National Saving Fund; Office of Labor Relations.

Proposals to solve
those challenges

Old civil & local pensions(w/o GPF)(~0.52 million)
GPF membership(~1.16 million)
SSF - Article 33(~11.12 million)

With PVD(~3.08 million,26.5%)

SOE/ independentagency employees(~0.5 million)

Without PVD(~8.54 million,73.5%)

Non-standard forms+ over 60 yrsemployees(~4.8 million)

Old ageallowance(100%)

National saving fund(~2.38 million, 11.6%)
SSF - Article 39/40(~5.3 million, 25.7%)
Without formal retirement plans(~12.9 million, ~62.6%)
Presented
PresentedbybyRoongkiat
RoongkiatRatanabanchuen,Ratanabanchuen,Ph.D.
Ph.D.

Current Thailand
Pension Structure

Proposals to solve
those challenges

Current pension challenges

Statistics of key pension fund savings in Thailand
10.00

PVD/GDP (%)

RMF/GDP (%)

GPF/GDP (%)

SSF/GDP (%)

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

0.00

2003

5.00

3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%

PVD members (RHS)

Total~28%of GDP

1.50
100%
80%
60%
40%
20%
0%-

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

0.50

Mutual funds
SOURCE: AIMC

PVD

3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000-% employers providing PVD

Proportions of household saving in different
channels

Average value per account (million THB)
1.00

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

15.00

PVD coverage rate

1992
1993
1994
19951996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Retirement saving funds to GDP

Mutual funds

Private funds

Households' savings in bank accounts

Insurance products

Retirement saving funds

Presented
PresentedbybyRoongkiat
RoongkiatRatanabanchuen,
Ratanabanchuen,Ph.D.
Ph.D.

Current Thailand
Pension Structure

Proposals to solve
those challenges

Current pension challenges

Low replacement rate
Government employees with GPF••*Assumption:

𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 5𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 × 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙
𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 =Pensions
50
Conversion of GPF lump sum into annuity*

Private sector employees with PVD•••

Conversion of PVD lump sum into annuity*
Social security office (Article 30)**
Conversion of lump sum from the employer into annuity**Benefits from SSO (Article 30) Benefits from SSO (Article 39)
Tenure length

Pensions(USD per month)

Tenure length

Pensions(USD per month)

15 years

20.0% x 484

15 years

20.0% x 155

16 years

21.5% x 484

16 years

21.5% x 155

17 years23.0% x 484

17 years

23.0% x 155

35 years of work receive SSO
pensions around USD 242.
SSO’s retirement age is at 55.

Benefits from SSO (Article40)
Pensions at USD19/month•
•••
••••
•

Around 64% of final salary
Around 15% of final salary
Around 15% of final salary
Around 4% of final salary
Around 6% of final salary

Current age = 25
Current salary = $1,000
Salary growth rate = 5%
Member contribution = 3%
Employer/government contribution = 5%
Average investment returns = 4.5%
Retirement age = 60
Discount rate 2%, Inflation rate 1.5%
Annuity factor = 18 from Thailand mortality table.
Quintile of income

Expense/Income ratio

1 (Poorest)

123%~USD 100 per month until 80

290%*Assumption: save $32 per month for 35 years
and earn 2% investment returns

381%

474%

5 (Richest)

56%

Overall70%

Benefits from National
Saving Fund

Benefits from Old age
allowanceAge

USD per month60 – 69

1970 – 79

2280 – 89

2690 +32

Average expense in Thailand = $240
Poverty line in Thailand = $87
Source: National Statistics Office

Presented
PresentedbybyRoongkiat
RoongkiatRatanabanchuen,Ratanabanchuen,Ph.D.
Ph.D.

Current Thailand
Pension Structure

Current pension challenges

Proposals to solve
those challenges

Others1%

Provident Funds

Investment
funds
16%

Equity18%

Moneymarketfunds
10%

Domestic, ~98.8%

Corporate
bonds
25%

Government
bonds
30%

.

Foreign, ~1.2%

Social Security Fund

Asset allocation of Thailand pension schemes is still largely
concentrated in low-risk assets but with more foreign investments.

Source: SEC, Data as of 2021

100.00%

Mutual funds

80.00%

55%

72%

40.00%

0.00%

14%
14%
8%
Pre-covid (2016-2019)

17%
2%

9%
2021

Source: BOT, Data as of 2021

Note: Investment categories are based on Morningstar Category.

Insurance companies
Retirement saving funds
Retail investors
OthersPrivate funds

Government Pension Fund

120.00%20.00%

Money
marketinstruments
4%

Foreignbonds
15%
Domestic
equity8%Foreignequity2%

Domestic, ~83%

Government
bonds
52%
REITs +
Infrastructure
funds
10%

Foreign, ~17%

Source: SSO 2021 Annual report , Data as of 2021

Foreign asset holdings by investor types

60.00%

Domestic
corporate & SOE
bonds bonds
9%

ForeignDomestic
privateequityprivate equity
3%
1%
Foreign
Domestic
equityequity
12%
4% Commodity
1%
Infrastructure funds
4%
Foreign real estate
4%
Domestic real estate
4%
Money market instruments
4%

Others4%
Government
bond
23%

Domestic, ~71.2%

Foreignbonds
10%

Domestic
corporate
bonds
26%

Foreign, ~28.8%

Source: GPF 2021 Annual report , Data as of 2021

Presented
PresentedbybyRoongkiat
RoongkiatRatanabanchuen,
Ratanabanchuen,Ph.D.
Ph.D.

Current Thailand
Pension Structure

Current pension challenges

Proposals to solve
those challenges

Increasing pension coverage
1. Mandatory occupational pension fund•The proposal of National Pension Fund•The proposal of Mandatory Provident Fund

 Compulsory ramp up of contribution rate from 3% to 10% in 10 years --> but thecontribution rate is calculated from the reference of THB60,000 per month ($2,000).
 Phase-in period for small and micro enterprises within 5 years.
 Centralization of fund management companies (not less than 3 companies receive
the right to manage the fund).
 Target-date fund is the default policy.
•Amend the current 1987 PVD act.

2. Establishing the National Committee of Pension Systems••Focusing on drafting a comprehensive pension policy.
Creating the National Saving Bureau.

Note: Information in this page is derived from the initial stage of proposal which is subject to debates, public hearings and modifications.

Presented
PresentedbybyRoongkiat
RoongkiatRatanabanchuen,
Ratanabanchuen,Ph.D.
Ph.D.

Thank You
Presented by Roongkiat Ratanabanchuen, Ph.D.