Only 5% of elderly able to live on savings

AS Thailand spirals to become a full-fledged ageing society, an economist at the Finance Ministry has reminded the public that the majority of people are getting old before they accumulate the savings needed for retirement. 

“Up to 36.7 per cent of elderly Thais need financial support from their children while some 33.9 per cent of the others have to continue working to support themselves,” Dr Pan Ananapibut of the ministry’s Fiscal Policy Office said at a recent seminar. 

The Thailand Research Fund, the Office of the National Economic and Social Development Board (NESDB), and the United Nations Population Fund organised the event this month to address the challenges associated with a greying society.

Pan said only 5.4 per cent of the elderly could live on the income from their savings or the sale of properties. 

Although the Thai government has provided monthly subsidies to the elderly population at rates between Bt600 and Bt1,000, the amount is far from adequate. 

When compared with other Asian countries, the percentage of social pensioners in Thailand is high. But in terms of benefits as a share of per capita income, the pension budget is relatively low. 

“The basic social pension can just serve as supplementary income, not as primary income,” Pan said. 

Company employees who think they have been saving enough money through the social security scheme should also realise that those old-age benefits may prove inadequate as well, he said. For example, members of the scheme will receive just Bt5,250 a month when they retire – even if they have made monthly contributions to the scheme for as many as 25 years and their salary during the last five years was higher than Bt15,000 per month. 

“For many, the amount of Bt5,250 may not be enough to cover all living expenses in a month,” Pan said. 

According to several researchers, more elderly people now live alone and cannot depend on their adult children. 

Pan said the government tries to help and ease the burden by providing free medical services and income-guarantee schemes. For example, there is the universal healthcare scheme and the National Savings Fund (NSF), which is open to unregistered workers and involves the government submitting matching contributions to NSF member accounts. 

According to 2015 research by the Thai Parliamentary Budget Office, the government will have to eke out Bt760 billion for the eight main social-welfare projects – including the NSF, the universal healthcare programme and the monthly subsidy for the elderly – every year by 2024.

The Financial Policy Office has also expressed concern that if the financial burden from the income guarantee schemes grows further, sustainability may be endangered. 

Prof Dr Worawet Suwanrada, dean of Chulalongkorn University’s Faculty of Economics, said while the rich could seek services from private providers or hire caretakers, the poor would need help from the government or local administrative bodies. 

“In addition, choices are still not available for the middle class. What should they do? The government needs to prepare systems for them,” he said at the forum. 

Worawet strongly recommended integration as Thailand trends towards a full-fledged ageing society, where at least 20 per cent of the total population is classified as “old”. 

He said the NESDB had presented a national economic and social development plan as a guideline for development, but the country needs to think how to combine the plan with existing plans for efficient elderly care. 

“Look at pension systems. Thailand now has several pension systems, requiring the government to put in money here and there,” he said. 

Worawet added that local administrative bodies, communities, social enterprises and volunteers must play a role. 

Dr Worawan Chandoevwit, lecturer at the Khon Kaen University’s Faculty of Economics and an adviser on social security at the Thailand Development Research Institute, said the government should regulate community welfare and savings options. Otherwise, he said, operations might not reflect real revenue and expenses, and end up being unsustainable. 

Today, there are nearly 6,000 social-welfare funds in the country, covering more than 5.3 million people in over 50,000 villages. 

Receiving start-up money from the Community Organisations Development Institute, these funds provide various benefits to their members. For example, they have offered soft loans, birth benefits, old-age benefits and medical benefits. 

In response to citizens’ needs, some funds have also provided soft loans. 

According to Worawan, when communities run social-welfare funds, they can cater to the specific needs of locals. 

“But the government should help take care of them or else they may collapse under the weight of money problems,” she said.