Labour minister to investigate measures to save social security fund

Labour Minister Phiphat Ratchakitprakarn vowed to investigate measures to avert a potential collapse of the Social Security Fund (SSF) within the next decade due to funding shortfalls. The SSF, currently holding 2.6 trillion baht, is projected to grow to at least 4 trillion baht by 2034, according to the Thailand Development Research Institute and the International Labour Organisation (ILO).

Despite this growth, the fund’s sustainability remains at risk due to Thailand’s shrinking workforce and ageing population. The minister warned that the SSF could deplete its resources within the next 30 years if no action is taken. To mitigate this risk, Phiphat emphasised the need for relevant agencies to explore ways to bolster the fund’s finances.

Among the proposed measures are increasing contributions to the fund, extending the retirement age from 55 to 60 and then to 65, and encouraging healthy elderly individuals to rejoin the workforce as part-time employees.

Another approach includes attracting more migrant workers from neighbouring countries to replace the shrinking workforce and encouraging their participation in the social security system.

Phiphat also suggested enhancing the fund’s investment returns, aiming for an annual return of 7% to 8% by 2026 or 2027, a significant increase from last year’s 2.5 to 2.6%. Currently, about 75% of the SSF’s investments are in low-risk assets, even though the social security law permits up to 40% to be invested in high-risk assets. Phiphat hinted at a possible move towards investing in more high-risk assets.

“The SSF management may need to revise its investment strategy next year to allocate more towards high-risk assets as allowed by law.

“This will need to be discussed with the board of the Social Security Office [SSO] to determine if it’s feasible to invest more in high-risk assets to achieve higher returns.”

Phiphat also suggested raising investments in high-risk assets to 50%.

A brainstorming session was held in May to find solutions to enhance the fund’s sustainability, and another session is scheduled for today and tomorrow, with representatives from Singapore state investor Temasek and the ILO invited to provide insights, said Phiphat.

“I prioritise the SSF and we must look ahead to seek ways to prevent future problems. We now understand what the situation will be like in 10 years, and we must act.”

The SSF is responsible for various expenditures, including accidents, illness, unemployment, and retirement payments for qualifying members aged 55 and older with at least 15 years of membership, reported Bangkok Post.