Population Ageing and the Well-Being of Older Persons in Thailand ...

Section 6: Policy and Programme Responses
ageing with respect health, income security and social
well-being. The Thai plan also includes provisions
for data collection, monitoring and assessment of its
implementation and specifies a number measures to
serve as indicators of progress for each of the Plan’s
five strategies. In this respect the Thai plan is also
consistent with the Madrid Plan’s call for countries
to review and appraise their implementation of its
recommendations. Moreover, many indicators set
forth in the Plan are consistent with those proposed
by UNESCAP for the countries in the region
(MSDHS 2007).
6.3 Social security system and pension plans
Until recently, government and state enterprise
employees, who constitute about 9 per cent of the
labour force in 2007, were the only sector of the Thai
population with government guaranteed retirement
benefits. The first state-supported pension system was
established in 1892 as part of welfare provisions for
public servants (Ruengsakul 2003). The 1951
Official’s Gratuity and Pension Act and its several
subsequent modifications provided a generous
pension and other retirement benefits for government
officials and state employees based on a defined
benefit system funded by the fiscal budget. Civil
servants who worked at least 25 years can chose a
pension or lump sum payment after leaving the
service. The amount of the pension could be as high
as 70 per cent of the last month salary. Those who
worked for 10 years or more but less than 25 years
receive only a lump sum payment. State enterprises’
employees generally receive a lump sum payment upon
their retirement equal to the number of years the
retirees served times the last month salary.
Government retirees who choose to receive a monthly
pension, but not those who chose a lump sum
payment, also enjoyed life time health care benefits.
In recognition of future trends towards population
ageing, both the government and private sector are
working towards developing broader based pension
and social security systems to reduce long term
financial uncertainty for the older age population. In
1997 the Government Pension Fund (GPF) was
established to replace the prior system for public
servants. It is a defined contribution system. Public
servants who joined the government in 1997 or later
are required to be a member of this fund. Those who
were civil servants before the establishment of this fund
could choose either to remain with the old system or
switch to the new GPF. Since some choose to remain
in the old system, the government in actuality runs
two systems concurrently. The conditions to receive
a pension or lump sum payment upon retirement are
similar in both systems. However, retirees under the
GPF receive a lower monthly pension but also receive
a lump sum of their contribution at retirement.
A national social security system, enacted in 1990,
was launched in 1991 to cover the private sector.
However, the Old Age Pension Fund within the
system was not set up until 1999. The fund
mandates contributions by employees, employers and
the state for all workers in private sector enterprises.
To receive a pension, subscribers must have
contributed for at least 15 years. Thus the first
payment of old age pension and benefits will not be
until 2014. The pension and old age benefits
provided by this system are relatively limited. Under
the existing system, members are eligible to receive
pension after leaving work at age 55. The amount of
the pension starts at 20 per cent of the average salary
of the last 60 months for those who contributed for
60 months and reaches a maximum of 42.5 per cent
as the length of the contribution period increases. As
of 2006, a total of 8.9 million workers are members
of the social security system.
Besides personal savings, other types of old age
insurance for the private sector include the Private
Sector Provident Fund (PVD) and Retirement
Mutual Funds (RMF). The PVD was established by
the 1987 Provident Fund Act and later underwent
several modifications. It is a privately managed,
voluntary savings, defined contribution type of
pension scheme. As of the end of 2005, there were
542 provident funds in existence, covering 1.7
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