Thailand's Retirement System Earns a C as Global Pension Index Warns of Ageing Strain

 

Thailand scores 52.2 in the Marsh CFA Institute index, with adequacy and sustainability both graded D as the report warns ageing will test every scheme.

 

Thailand's retirement income system has been graded C in the 2026 Marsh CFA Institute Global Pension Index (MCGPI), with adequacy and sustainability both rated D.

 

The result suggests that, for many Thais, income in later life is still not enough. Thailand scored 52.2 out of 100, according to the report released earlier this week.

 

That places it in the lower half of the C band (50 to 59), alongside Kenya (53.1), Vietnam (54.6), Indonesia (50.7) and South Africa (50.4). Only four of the 55 systems assessed fall into the D band: the Philippines (49.2), India (46.8), Türkiye (46.6) and Argentina (43.7).

 

The index judges systems on adequacy (40% of the score), sustainability (35%) and integrity (25%). Thailand scored 48.2 for adequacy and 45.2 for sustainability, both D grades.

 

Its best result was integrity, which covers regulation, governance, member protection and communication. It scored 68.3 there, a B, but still below the 77.2 average across all systems.

 

 

A slow improvement, a wide gap

Thailand has edged forward. Its overall score rose from 50.6 last year, helped chiefly by integrity, which climbed from 63.1. Adequacy and sustainability barely moved, gaining 0.3 and 0.4 points, respectively.

 

The gap to the global average remains large. Across all 55 systems the mean overall score is 65.3, leaving Thailand 13.1 points behind. The shortfall is widest on adequacy, where the average is 66.5 against Thailand's 48.2. On sustainability the average is 55.4.

 

 

 

The authors urge caution when comparing close scores. Each result draws on more than 50 indicators, some of which are hard to compare across borders, so a difference of under two or three points should not be read as one system being better than another.

 

A gap of five or more, however, indicates a genuinely more effective system. By that yardstick, Thailand is roughly level with Kenya and Vietnam. Its distance from the leaders is not.

 

 

How Thailand compares with its neighbours

Singapore, an A-grade system with 82.0 points, is nearly 30 points ahead. Hong Kong SAR (71.2) is a B. Malaysia (61.1) and China (60.6) are C+ systems, while Taiwan (59.7), Japan (58.0), South Korea (56.4), Vietnam and Indonesia sit in the C band with Thailand.

 

In South-East Asia, only the Philippines is graded lower, at D. Singapore's score is built on a fully funded Central Provident Fund, which the report cites as a contrast to pay-as-you-go public schemes.

 

The report also notes that Singapore recorded the largest rise in labour-force participation among those aged 65 and over, up 19 percentage points over two decades.

 

 

The global picture

The Netherlands has the highest score in the 2026 edition at 85.8, followed by Denmark (84.1), Iceland (84.0), Singapore, Israel (81.9) and, for the first time, Australia (80.6).

 

Together they form the six A-grade systems. The Netherlands is moving from a largely collective defined-benefit model to individual defined-contribution pensions, with the transition due to complete by 2028.

 

At the other end, Argentina scored 43.7, a D. No system fell into the lowest E grade.

 

 

 

 

Five systems improved their grade this year: Australia, the UAE, Oman, Panama and China. The average overall score rose by 1.1 points, and the index now covers 66% of the world's population after adding the Dominican Republic, Kenya and Qatar.

 

Sustainability proved the weakest dimension worldwide. Just five systems earned an A on it, while 14 were graded D and six E. By contrast, 24 achieved an A for integrity.

 

Thailand's profile, with relatively stronger governance but weaker income and funding, therefore reflects a broader pattern: well-regulated systems do not always deliver enough, or last long enough.

 

 

Why ageing is the central challenge

This year's feature chapter examines how falling birth rates and rising life expectancy will reshape pension systems. Globally, fertility has fallen to just above the replacement rate of 2.1.

 

Of the 55 systems, 43 are below that level and 23 are below 1.5. Hong Kong SAR and South Korea record 0.72.

 

Longevity compounds the pressure. In the more developed regions, life expectancy at 65 is now 20 years, and at 80 it is 10.

 

The report projects that the aged dependency ratio, measured as people aged 70 and over relative to those aged 20 to 69, will climb from 23% to 37% in those regions over 30 years. It reaches 81% in Hong Kong SAR and 60% in Japan and Taiwan.

 

The chapter does not publish Thailand-specific demographic projections, but the logic applies to any system with weak funding and modest benefits.

 

Public spending on old-age and survivor benefits has risen by an average of 1.5% of GDP since 2000 across the 27 OECD members in the index, and a further 0.7% rise is projected over the next 20 years.

 

The report warns that the greatest strain will fall on unfunded arrangements unless they are restructured. In response to longevity, the index has changed how it measures adequacy.

 

Net replacement rates, the share of pre-retirement earnings that a pension replaces, now count 75% at retirement and 25% at age 80, recognising that retirees need support through what may be 30 or 40 years.

 

 

What the report recommends

The authors set out three broad priorities: clear objectives for pension systems, a firmer emphasis on funding future obligations, and greater flexibility in product design and retirement ages.

 

They cite Australia's legislated objective for superannuation and Switzerland's constitutional definition of its three pillars as models, and caution that overly radical reform can erode trust, as Poland's reversed overhaul of the late 1990s showed.

 

The wider reform menu includes extending coverage to non-standard and self-employed workers, reducing early withdrawals from retirement savings, improving governance and transparency, raising pension ages in line with healthy life expectancy, encouraging older people to keep working, boosting private saving and narrowing gender pension gaps.

 

The report argues that many people will not save without some element of compulsion or automatic enrolment.

 

Flexibility is a recurring theme.

 

The report suggests traditional retirement ages of 60 or 65 are increasingly out of step with longer, healthier lives, and that retirees should be able to suspend and later resume pensions to take up part-time work.

 

Tim Jenkins, lead author and partner at Marsh, said flexibility "is no longer optional". Challenges and concerns The report acknowledges that reform is politically difficult.

 

Baby boomers remain a powerful voting bloc, while younger generations face housing costs and uncertain employment. Without earlier, smaller adjustments, it warns, intergenerational inequity may force more drastic change later.

 

Investment risk is another concern. As memberships age and more savers move into drawdown, funds are likely to shift towards lower-risk assets, which could affect returns and the roughly US$70 trillion held in private pension funds globally.

 

For Thailand, the findings point to a dual task: preserve the governance gains that lifted its integrity score while addressing the weaknesses behind two D grades.

 

The report offers no country-specific prescription in this edition, and Thai policymakers will weigh the options against local conditions. Its overarching message, however, is that waiting carries a cost.

 

"No single policy or investment decision can achieve that," said Mona Naqvi of CFA Institute. Sound design, governance and oversight, she argued, must work together.