A national body should be established to manage people’s pension funds and tackle any discrepancies between the funds, according to Worawan Chandoevwit, social security adviser to the Thailand Development Research Institute (TDRI).
The body should work the same way as a national committee to ensure the pension funds, which cater to various groups of workers, offer the same benefits to all subscribers.
There are currently two pension funds: the civil servants fund and the Social Security Fund for the private sector.
The government is also setting up a national savings fund for other workers.
Welfare benefits vary in each fund and so do state contributions.
The discrepancies in the funds need to be addressed, said Ms Worawan who spoke on the issue at last week’s forum organised by the TDRI.
The adviser said a national pension committee would serve as an umbrella body to manage aspects of the funds and do away with any discrepancies.
Making the funds equal would help cut back on expenses and reduce the cost of managing the individual funds. The subscribers themselves also stand to gain as the committee would be able to link up the funds of workers switching from one fund to another when they change jobs. This would mean they could continue to invest their pension money.
Ms Worawan said that contributing to a fund from the start after a job change would mean restarting the investment with a small reserve of pension money. “This exposes them to the risk of their pension falling short when they retire,” she said.
She insisted more people must be educated about the importance of building up savings for when they retire.
“People tend not to see the benefit of their income being deducted to go towards the pension fund. But savings are essential for one’s future,” she said.
Instead of receiving their pension over a number of years, some retirees choose to take it all as one lump sum with the intention of using the cash on investment ventures.
However, such investments might fail and they could lose all their life savings.
Others use the lump sum to buy nonessential items, which quickly depletes their pension, she added.
For most people, it makes more sense to receive a life-long pension which is a source of financial security.
First Published: Bangkok Post, April 27, 2015