The Thai government is taking proactive measures to protect the Social Security Fund (SSF) from potential collapse in the future. Labour Minister Phiphat Ratchakitprakarn has acknowledged the challenges facing the fund, including insufficient funding and demographic shifts that could strain its sustainability.
Current Situation of the Social Security Fund
As of now, the SSF holds 2.6 trillion baht, a significant amount that is expected to grow to at least 4 trillion baht by 2034. However, despite this growth, the fund’s future is uncertain due to several factors. Thailand is experiencing a decline in the workforce available to contribute to the fund, coupled with an aging population that will place increasing demands on social security benefits.
The Challenge of a Shrinking Workforce and Aging Population
Labour Minister Phiphat has raised concerns that in 30 years, the SSF may face a shortage of funds. This is primarily due to the shrinking workforce, which reduces the number of contributors to the fund, while the aging population increases the number of beneficiaries. To address this challenge, the government is exploring various strategies to strengthen the fund’s financial position.
Proposed Measures to Safeguard the SSF
One of the proposed measures is to increase contributions to the fund, ensuring that sufficient funds are available to meet future demands. Additionally, there is a suggestion to extend the retirement age from 55 to 60 and 65, enabling individuals to continue working and contributing to the fund for a longer period. Furthermore, the government is considering encouraging healthy elderly individuals to rejoin the workforce as part-time employees, boosting both the fund’s revenue and the workforce.
Attracting Migrant Workers and Enhancing Investment Returns
Another strategy being explored is attracting more migrant workers from neighboring countries to join the social security system, thereby expanding the contributor base. Additionally, the government aims to enhance social security investment returns by increasing annual returns to 7-8% by 2026 or 2027, up from 2.5-2.6% in the previous year. This will involve changing the fund’s investment strategy to allocate more funds to high-risk assets, potentially increasing returns.
Adjusting Investment Strategies for Higher Returns
Currently, the SSF predominantly invests in low-risk assets, despite the law allowing for up to 40% of investments in high-risk assets. Minister Phiphat has suggested revising the investment strategy to include more high-risk assets, with the possibility of raising the allocation to 50%. This shift in investment strategy is expected to generate higher returns and ensure the fund’s sustainability in the long run.
Collaborative Efforts to Secure the SSF’s Future
The government is actively engaging with various stakeholders to address the challenges facing the SSF. A brainstorming session was held in May to explore solutions for enhancing the fund’s sustainability, with representatives from Singapore state investor Temasek and the International Labour Organization (ILO) providing insights. Another session is scheduled for October, where further strategies will be discussed to safeguard the SSF’s future.
Looking Ahead and Taking Action
Labour Minister Phiphat emphasizes the importance of prioritizing the SSF and taking proactive steps to prevent potential problems in the future. With a clear understanding of the challenges ahead, the government is committed to implementing measures that will ensure the fund’s long-term viability. By exploring innovative solutions and collaborating with experts, Thailand aims to protect the Social Security Fund and secure the financial well-being of its citizens.