26-10-2024 (BANGKOK) Thailand’s Labour Ministry has unveiled sweeping reforms to the nation’s retirement and social security systems, including plans to raise the retirement age to 65 for both private and public sector workers, matching the standards set by Singapore and Switzerland.
Labour Minister Phiphat Ratchakitprakarn announced on Friday that improved healthcare and increased life expectancy have prompted the ministry to consider this significant adjustment to retirement policies. The reforms extend beyond retirement age modifications to include comprehensive changes to the Social Security Act.
In a major expansion of social protection, the ministry aims to bring approximately 2 million migrant workers from Myanmar, Laos, and Cambodia under the social security umbrella. The reforms will also extend coverage to previously excluded workers, including taxi drivers, delivery riders, agricultural labourers, domestic workers, and street vendors.
The proposed changes include an increase in fund contributions, with employers and employees each contributing an additional 2%, while government contributions would rise to 2.5%, resulting in a total increase of 6.25%. The ministry is also pursuing plans to adjust wage ceilings and salary caps to reflect current economic conditions.
To strengthen the fund’s financial stability, officials are exploring the possibility of transferring the management of medical costs—currently the largest expense at 60 billion baht annually—to insurance companies. This move aims to transform fluctuating healthcare expenses into fixed costs, enabling more efficient fund management.
The Social Security Office has set an ambitious target of achieving a 5% return on investments by 2025, up from the current 2.3-2.4%. The minister revealed that overseas investments, particularly in US and European markets, have already yielded returns of 6-7%.
A strategic shift in investment allocation is planned for next year, with 65% of funds to be placed in low-risk assets and 35% in higher-risk investments, adjusting from the current 70/30 split. Minister Phiphat emphasised that without these reforms, the Social Security Fund could face depletion within three decades.
