THURSDAY, March 28, 2024
nationthailand

Early set-up of national savings fund urged amid rapidly greying population

Early set-up of national savings fund urged amid rapidly greying population

Bt500 monthly stipend unsustainable, says TDRI researcher

The current payment of a monthly stipend for the elderly is unsustainable, and the government should speed up implementation of a universal pension scheme and introduce legislation to help older people manage their assets, Thai and Japanese economists have suggested.

To address the Kingdom's rising population of elderly people, the government must act fast to create a system that takes care of them, Mathana Phananiramai, a researcher at the Thailand Development Research Institute (TDRI), said yesterday.

She urged the government to speed up implementation of the national savings fund, a universal pension scheme that was passed into law by the previous administration.

"I'm not sure whether it is on the government's priority list," she told a news conference on "Thailand National Transfer Accounts", jointly hosted by the TDRI and Nihon University Population Research Institute (NUPRI).

The Bt500 monthly stipend introduced by the last government, possibly rising to Bt1,000 under the current administration, is a well-intentioned and beneficial measure, but one that cannot be sustained because of the high cost, she said.

The national savings fund is designed to provide pensions for about 25 million workers who are not covered by the existing social-security scheme.

Both the government and participants will contribute to the fund and, upon reaching the age of 60, members will receive a pension until they die.

Mathana also suggested that the government should pass a new law, introducing a financial trustee vehicle designed to help the elderly manage their assets.

"The elderly, whose memory becomes poorer, with some falling victim to Alzheimer's disease, [often] cannot manage their wealth, so the government should step in," she added.

Japan has recently introduced such a law, said Naohiro Ogawa, professor of economics at NUPRI.

"The law requires banks to have relatives of the elderly witness when the elderly buy trust funds from them," he said, adding that the requirement had been introduced to ensure that older people are treated fairly by financial institutions.

He maintained that based on the experience of Japan's ageing society, financial education was urgently needed. "Seventy-one per cent of Japanese adults have no knowledge about investment in equities and bonds," he said.

Ogawa also said that elderly-care centres in Japan had been booming in recent years, growing at an annual rate of about 30 per cent.

 The centres are run by local government.

Worldwide trend

He said that since the turn of the 21st century, population ageing has rapidly emerged as a major worldwide demographic trend due to a decline in fertility.

Thailand has also been moving quickly towards a greying society, with the elderly now accounting for about 11 per cent of the population, a level that is expected to increase to 15 per cent over the next few years, Mathana said.

Nongnuch Soonthornchawakan, an economist at Thammasat University who conducted a study titled "National Transfer Account of Thailand: Gender Difference", found that female adults spend more on health than their male counterparts.

This could suggest that women were more vulnerable to illness than men, she said.

Her transfer study involved examination of the allocation of financial resources throughout the life cycle of individuals.

When people are either young or elderly, they earn less than they need for consumption, leading to a deficit that needs to be financed by the family or public funds.

However, people of working age generally have surplus resources, which are subject to taxation and reallocated to other groups.

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