"Options for Expanding
Thailand's Pension Coverage to
the Informal Sector Workers"
By
Mrs. Pannee Sathavarodom
Director–General of Fiscal Policy Office
Current Issues on Pension Reform
Sustainability and adequacy of retirement income derived from pension fund system
Problem is aggravated by the long-term demographic trend towards aging society
In the future, reduced active labor force will face a more heavily burden in supporting the rapidly increasing population of elderly citizens
Establishment of a multi-pillar system
To address the issue of adequate post-retirement incomes, Thai government has strived for years to achieve the multi-pillar system
Pillar 1 :
The first cushion for social safety net, intended primarily to provide poverty relief
Defined benefit plan such as
1. The original form of the government pension or the PAY-AS-YOU-GO system, which is not funded
2. Old Age Pension System (OAP), administered by the Social Security Office, covers about 25% of workforce.
Establishment of a multi-pillar system
Pillar 2 :
Usually called a mandatory accumulation program, supposed to be a supplementary to Pillar 1
Based on a defined contribution principle and benefits are related to an individual's account at his/her retirement
Example of Pillar 2 is the Government Pension Fund (GPF).
Proposing the "National Pension Fund" (NPF), based on the defined mandatory contribution concept, funded by both employee and employer, designed to be privately managed
Establishment of a multi-pillar system
Pillar 3 :
Based on a voluntary contribution.
Examples are private-sector's provident funds to which employers and employees voluntarily agree to contribute. Referred to occupational or employer-sponsored pension plan. Contributed by 7,800 employers and 1.7 million employees with assets value of 382 billion baht.

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