Elderly people exercise at a new centre for the aged at Soi Lat Phrao 101. The ageing society is putting heavy pressure on the Social Security Fund’s old-age pensions. (Photo by Patipat Janthong)

Amid concerns about the sustainability of the Social Security Fund (SSF) due to an ageing population, the Social Security Office (SSO), which oversees the SSF, continues to lock horns with labour networks over how best to address the issue.

The SSO’s approach is to raise the cap of base salary for payroll deductions from 15,000 baht to 20,000 baht a month. This means the maximum deduction, which would be funnelled to the SSF, would rise from 750 baht to 1,000 baht a month, an approach the SSO believes will ensure the stability of the fund for the old-age pension over the course of 47 years.

The SSO says the measure would be beneficial to subscribers as they would receive a better pension when they retire in addition to other benefits.

According to the SSO, a survey was held to gauge subscribers’ opinions about the approach in 2016. The office said 81% of the respondents agreed with it, while 70% of employers also concurred.

“We believe the benefits for insured people are the main thing. We don’t aim to collect more contributions even if rumour has it that the SSF is insecure or collapsing,” SSO secretary-general Suradej Waleeittikul said.

Dr Suradej confirmed the fund is still financially secure. As of Sept 30 last year, 1.7 trillion baht was in the fund with the return on its investments reaching 41.3 billion baht.

He noted that more contributions would lead to more benefits for the subscribers.

He gave an example of a monthly allowance for subscribers who become disabled, which is set at 50% of their base salary. As the cap of base salary rises from 15,000 baht to 20,000 baht, disabled subscribers would see their allowance rise from 7,500 baht to 10,000 baht a month.

The SSO also came up with a proposal to have its subscribers receive pension payouts from the age of 60 instead of the current 55. It believes the measure would make the fund more secure over the course of the next 38 years. However, the measures have drawn flak from labour groups.

The Thai Labour Solidarity Committee (TLSC) has made it clear the increase in the base salary cap for payroll deductions should not be used as a way out, saying this would place more of a burden on the insured and their employers.

It also disagreed with regulations that allow the government to contribute less than the workers and their employers.

It said the insured contribute 5% of their salary to the SSF, on par with their employers, while the government contributes only 2.75%.

“With the plan to extend the age for pension payouts from 55 to 60, this would certainly affect the subscribers, particularly employees in industrial plants, who risk being exposed to chemicals every day. Most of them want to retire at the age of 55. They want to receive their pension and live a simple life upcountry,” said Chalee Loysoong, vice-chairman of the TLSC.

Meanwhile, the government has yet to pay more than 50 million baht as part of its contribution to the fund, the committee said.

The TLSC has petitioned the Supreme Administrative Court to revoke the three ministerial regulations which allow the government to contribute less than workers and their employers.

Arunee Srito from the informal workers network said talks have been held among workers to push for reform of the fund.

She said the government’s lower rate of contribution and default on payment caused lost opportunities for the SSO’s investments.

A source at the SSO noted that various measures on how to address inadequate pensions had been raised to governments in the past, including the increase of contributions, but they were ruled out by politicians in power for fear of losing their popularity.

A researcher of Arom Pong-pa-ngan Foundation, which focuses on labour assistance, said more than 94% of the countries in the world set the minimum age to receive retirement pensions at 60 and several have had to gradually raise even that threshold.

In the Southeast Asia, the minimum age ranges from 55 to 60, researcher Bandit Thanachaisethawuti said.

Consequently an extension of eligibility age from 55 to 60 is an option which allows subscribers to have more time to add to the fund, he noted.

This measure, however, might upset some employees who do not want to continue working after 55 due to personal preference or health conditions, Mr Bandit said.

Manit Promareekul, who represents the labour faction of the Social Security Committee, said he would like opponents and supporters of the rise of the base salary cap to sit down and talk so they could come up with a common way out.

He said he agreed that the measure would be beneficial to subscribers who would be entitled to higher old-age pension payouts as well as other benefits.

Mr Manit conceded the current pension payouts are very low, which does not correspond with the current cost of living and so might need addressing.

News Reporter

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