A ray of light for our greying society

A lack of money isn’t the end of the world, but it comes pretty close for many retirees. The sad fact is that most Thais start saving late for their retirement, then end up with little to live on in later years. Spurred by the dismal findings of recent studies on the subject, previous governments have taken measures to address the problems but made little headway. 

Now comes fresh hope with news that the government will launch the National Savings Fund (NSF) on August 18. The plan was first raised during the last Democrat government but then shelved by its Pheu Thai-led successor. Realising that a national crisis is brewing among the country’s retirees, the Prayut administration has revived the idea for this added safety net. 

Forty-two per cent of Thailand’s elderly do not have enough money to support themselves, according to the National Economic and Social Development Board (NESDB). About 12 per cent of Thai retirees have no savings at all. Another study found that very few Thais consider pension plans until well into their 40s. Government assistance for those aged 60 and up is a mere Bt600-Bt1,000 a month, which is hardly enough to live on. Alarm bells are ringing because Thailand’s population is ageing, with one in four people set to be retirees in the not-so-distant future. 

If things go to plan, the NSF will provide a safety net for some 30 million citizens who are self-employed or work in the unregistered sector, beyond the reach of government social security or company pension funds. Among them are farmers, freelancers and casual workers, all of whose contribution to the country goes largely unnoticed. The NSF will be a state-run provident fund open to people aged 15-60 and topped up by the government at a rate based on the member’s savings and age. Once members turn 60, they will get a monthly pension. The sooner they join, the better chance they have of securing their financial status for their retirement years.

Although the NSF is designed as a retirement-savings scheme, it should also do something to foster a “saving” culture, which has so far been missing in Thailand. In fact, the country has seen a continuous drop in personal savings over the past few decades. Among bank customers, 98.32 per cent of us have less than Bt1 million in our deposit accounts, with combined earnings of only Bt2 trillion. Thailand’s gross earnings are only 27 per cent of GDP – lower than our Asean Economic Community counterparts Singapore, Malaysia, Indonesia and the Philippines. Experts warn that this worrying situation, fuelled by growing household debts, will affect the country in the long term thanks to slow productivity and sluggish investment.

The launch of the National Savings Fund is a step in the right direction, but more needs to be done in preparing for the advent of our “grey” society.  The government must follow up on the plan and bring into place more support.  

Premier Prayut Chan-o-cha’s move to become the first member of the NSF is good publicity for the fund, but the biggest hurdle still lies ahead – instilling a saving ethos in young Thais.