Labour Minister Phiphat Ratchakitprakarn announced on Sunday his commitment to investigate measures to avert a potential collapse of the Social Security Fund (SSF) within the next decade due to inadequate funding.
As reported by the Thailand Development Research Institute and the International Labour Organization (ILO), the SSF currently holds 2.6 trillion baht, with projections indicating it will grow to at least 4 trillion baht by 2034. However, this growth does not guarantee sustainability, as the country is experiencing a declining workforce and an aging population, according to Mr. Phiphat. He warned that in 30 years, the fund could be at risk of running out of money.
Mr. Phiphat emphasized the necessity for relevant agencies to seek ways to enhance the financial stability of the fund. Proposed strategies include raising contribution rates, increasing the retirement age from 55 to 60 and 65, and encouraging healthy seniors to return to the workforce as part-time employees.
Another approach involves attracting more migrant workers from neighboring countries to compensate for the reduced workforce and motivating them to participate in the social security system.
The minister also advocated for improved investment returns for the social security fund, suggesting they should increase to about 7-8% annually by 2026 or 2027, up from the 2.5-2.6% achieved last year. Currently, approximately 75% of the fund’s investments are allocated to low-risk assets, despite the social security law permitting up to 40% to be invested in high-risk assets.
To potentially achieve higher returns, Mr. Phiphat indicated that the management of the SSF may need to revise its investment strategy next year to allocate more funds to higher-risk investments. He even suggested the possibility of increasing this allocation to 50%.
Discussions regarding this potential investment shift will involve the board of the Social Security Office (SSO) to evaluate the feasibility of investing more in high-risk assets.
In May, the SSO held a brainstorming session aimed at devising solutions to enhance the fund’s sustainability, with the next session scheduled for October 24-25, inviting representatives from Singapore’s state investor Temasek and the ILO to share their insights.
“I prioritize the SSF and we must look ahead to find preventive measures. We are now aware of what the situation may be in 10 years, and we must take action accordingly,” stated Mr. Phiphat.
The SSF is designed to cover various expenses, including accidents, illnesses, unemployment, and retirement payments for members aged 55 and older with a minimum of 15 years of membership.
