Thailand ranked the worst pension system in the world

Thailand frequently dominates the charts when it comes to places to travel. However, this time the Land of Smiles has bagged the top spot for having the world’s worst pension system – while Iceland is ranked as the best pension system in the world and Singapore ranked as the best pension system among countries and city-states in Asia. In this Pacific Prime Thailand article, we look at why Thailand has the world’s worst pension system and more.

A closer look at Mercer CFA Institute Global Pension Index

Mercer’s latest CFA Institute Global Pension Index survey results came out on October 14th, 2022, marking its 14th edition. 66% of the global population in 44 locations around the world were surveyed based on each country’s pension system. The three aspects considered include:

• Adequacy
• Sustainability
• Integrity

Thailand came in last at the 44th spot, receiving a D grade and 41.7 marks out of 100 – giving the country a 63.0 average score. Other countries that received a D grade include Argentina, the Philippines, India, and Turkey. Singapore earned 71.4 marks, giving it the 9th spot in the world.

The top 10 countries with the best pension system

The top 10 countries with the best pension systems globally are as follows:

1. Iceland (84.7)
2. Netherlands (84.6)
3. Denmark (82)
4. Israel (79.8)
5. Finland (77.2)
6. Australia (76.8)
7. Norway (75.3)
8. Sweden (74.6)
9. Singapore (74.1)
10. The UK (73.7)

Additionally, the survey showed that the economic situation has resulted in the adoption of the defined contribution (DC) system from the former defined benefit (DB) system. This means that people must carefully plan their retirement nowadays more than in the past.

The pension system in Thailand

Thailand relies on three pension system types:

• Social Security Fund (for all private sector careers)
• Provident Fund
• Personal Financial Management (e.g. Retirement Mutual Fund or RMF)

What’s more, the percentage of the local population aged 65 and above is predicted to rise from around 10% in 2019 to over 20% by the 2030s. Since Thailand has the world’s lowest pension ranking, these statistics mean that over a quarter of Thailand’s population will be aged 60 or older by 2030, and the majority of them will be poor. That is unless they worked for major corporations with voluntary social benefits or as civil servants. Only those working for Thailand’s government system receive a pension based on their salary – falling under the Thailand government pension fund.

Most Thai citizens receive the following pensions:

• Age 60-69: THB ฿600 per month
• Age 70-79: THB ฿700 per month
• Age 80-89: THB ฿800 per month
• Age 90+: THB ฿1,000 per month

Note that these numbers don’t include Welfare Card income, otherwise known as the low-income person’s card in Thailand. While Mercer noted “some desirable features” in pension systems such as Thailand’s, there were also significant weaknesses that must be addressed.

How to prepare for retirement in Thailand

It’s no secret that reform is needed for Thailand’s pension system. With the retirement age in Thailand set at 60, many employees will have to carefully plan for the future. David Knox, Mercer’s senior partner, said people must take more responsibility for their retirement compared to the past due to factors like high inflation and interest rate, as well as the unstable economic situation.

Retirement is something everyone looks forward to and daydreams about while they’re at work. But whether your retirement goals involve traveling or hanging out with loved ones, the one thing they have in common is the need for financial support. Without long-term plans for the future, many people find themselves lacking the resources to live retirement the way they imagined and either have to work for longer than intended or, at worst, put their retirement dreams on the shelf.

Perhaps you’re already reaching retirement age and have your sights set on Thailand, as many expats do. With its lower cost of living, comfortable weather, ideal location for exploring Southeast Asia, and easy transition for foreigners, it’s easy to see why. The five best places for retirement in Thailand include:

• Pattaya
• Chiang Mai
• Phuket
• Hua Hin
• Koh Samui

A note about visas for retirees in Thailand

One of the most important things to consider for retirement planning in Thailand is visas. To retire in Thailand, you’ll need a non-immigrant O-A visa or a non-immigrant O-X visa. The minimum age for both visas is 50. You’ll also have to prove adequate finances (which are higher for the non-immigrant O-X visas due to the extended duration of stay), pass various health checks, and secure medical insurance.

While citizens from any country can apply for the non-immigrant O-A visa, the non-immigrant O-X visa is limited to a selection of countries. Get familiar with the exact visa requirements you’ll need by reading our Thai visa guide 2022: Types and requirements article.

Further reading: Healthy aging in Thailand: Top tips for looking after yourself in retirement

Plan for retirement with Pacific Prime Thailand

Healthcare costs in Thailand may be more affordable than back home, but that doesn’t stop them from adding up before you know it. This is especially true if you opt for private hospitals – which many expats prefer for reasons such as world-class medical services and shorter wait times.

While health insurance is mandatory as a retiree applying for a non-immigrant O-A or O-X visa, you still have to make sure the plan you choose meets your medical and lifestyle needs. It’s advisable to discuss your options with a reputable health insurance broker like Pacific Prime Thailand before committing to a policy.

With over 20 years of experience in the insurance industry (and working with expats), our expert advisors will be able to give you impartial, tailored advice. Whether you’re looking for the best health insurance plan for retirees in Thailand, health insurance for Thailand expats, or other types of health insurance, we can help you find the ideal plan for your needs and budget. On top of that, you’ll get an array of value-added services (e.g. claims and renewal support, administration assistance, etc.) at no additional cost compared to going straight to an insurer.

Contact us for a free quote today!

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Jantra Jacobs

Senior Copywriter at Pacific Prime Thailand

Jantra Jacobs is a Senior Copywriter at Pacific Prime with over 10 years of writing and editing experience. She writes and edits a diverse variety of online and offline copy, including sales and marketing materials ranging from articles and advertising copy to reports, guides, RFPs, and more.

Jantra curates and reports on the results of Pacific Prime’s monthly newsletters, as well as manages Pacific Prime’s Deputy Global CEO’s LinkedIn posts. Complemented by her background in business writing, Jantra’s passion for health, insurance, and employee benefits helps her create engaging content - no matter how complex the subject is.

Growing up as a third-culture kid has given her a multicultural perspective that helps her relate to expats and their families while 8 years of working remotely have given her unique insight into hybrid work arrangements and enthusiasm for employee benefits.

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