Thursday, July 09, 2020

Are you financially strong enough to live long?

Jul 04. 2016
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By Achara Deboonme
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A middle-aged man alone in a worn wheelchair pushes himself forward on the frontage road of Bangkok’s busy Bangna-Trat Road.
It was a depressing scene, especially after I had just attended a World Bank briefing on ageing.
Ageing deserves to be highlighted as the most pressing issue for Thailand’s economy and society as a whole. At the briefing, the media was once again warned of the economic perils if the government does not act now.
Action is needed given that the majority of people still expect the government to be responsible for financially assistance to the elderly. But the fact is, the government does not have enough money to help everyone.
Authorities last month concluded the initial budget for the 2017 fiscal year – revenue is expected to increase by 0.6 per cent to Bt2.343 trillion. However, expenditures are set at Bt2.73 trillion, a 0.5-per-cent increase from the previous year. Of that total, the investment budget of Bt546 billion shows a 0.4-per-cent increase year-on-year. Yet the biggest chunk, Bt2.2 trillion, a 1-per-cent increase from the previous year, will be spent on fixed expenditures, chiefly government salaries.
Part of this will go to the Social Development and Human Security Ministry. In the 2014 fiscal year, the ministry set its sights to improve the quality of lives of the elderly but with a budget of only Bt6.9 billion it covered 334,455 people, including the elderly, children, disabled women and underprivileged people. 
We can imagine how much is allocated to homes for the elderly. It is not surprising that at one facility, where less than Bt100 is  allocated per day for meals, one officer has to take care of as many as 20 elderly people. It is also worth noting, all facilities are open to donations.
There is room for improvement.
In 2011, when allowances for the elderly were first distributed, the numbers were: Bt600 a month for those aged 60-69 years old; Bt700 for the 70-79 age group; Bt800 for the 80-89 age group; and Bt1,000 for those aged 90 or more. It is unbelievable that such small sums helped many elderly to survive, as well as  helped some of their children who cannot support themselves financially. Yet it is equally sad that some elderly people with adequate savings and the financial support of their children also claim the allowances.
Ulrich Zachau, the World Bank's director for Southeast Asia, said on the sidelines of the briefing that allowances should be continued but the government needs to adopt a targeted approach to benefit only the very poor and the very elderly.
It is not beyond the imagination that with the same budget, a well-targeted approach could mean more money for the very poor and the very elderly. Hopefully, the government’s digital initiative in the future will bring about a better screening process.
It is a positive sign that in 2012 only 0.1 per cent of Thailand’s population lived below the poverty line. By World Bank standards, that means people who live on less than US$1.90 (Bt67) per day. That is low compared to the 7.2-per-cent average in East Asia and Pacific countries in the same year. 
But it is worrisome that people can work for many years and yet remain unable to support themselves as they age and their strength diminishes.
It is clear that in time, the government must allocate a higher budget. This will happen just as the number of Thailand’s working population, aged 15 to 65, will shrink from 49 million to 40 million by 2040. With fewer workers, if productivity remains unchanged, there will be less revenue earned.
Those with stable incomes have tried to help themselves. Thais spend relatively a lot on life-insurance policies – Bt140 billion in the first quarter of this year or a 6 per cent increase from the same period last year, despite slow economic growth.
Last year, long-term equity funds attracted Bt34.4 billion in investment, along with Bt20.9 billion invested in retirement management funds. At the end of last year, the combined value of these two types of funds – very attractive to taxpayers – exceeded Bt450 billion.
But how can we be sure that we have saved enough to support ourselves years after our retirement?
Taxpayers are now offered a Bt30,000 tax deduction if they financially support a parent. That is a small sum, given medical bills and other expenses. The elderly do not necessarily eat fancy food, but they need specially prepared meal and other special care.
Better healthcare has extended the longevity of Thais from 57.29 years in 1962 to 74.9 years in 2012.
While most workers spend more than half of their income on mortgages, car loans, food and travel, a study shows that 30 per cent of elderly people’s spending is on healthcare. Will savings be sufficient? For those without savings, how they will they live until their time comes?
Several organisations are now promoting financial literacy to help people prepare for retirement age. But we have to admit that such knowledge remains limited among Thai people. Several of my friends have just started to think about this issue, when they are hitting 50 soon. Some find it difficult to save as they still have to cover mortgages and other loans.
My thoughts are with that disabled man. Soon, he will not have the strength to operate his wheelchair. Who will take care of him?

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