Thailand Financial Sector Assessment Program : Funded Pension System
While Thailand’s pension system is typically described as a multipillar pension scheme, its design is highly fragmented and offers adequate coverage only to a small segment of the population, including civil servants and high-income individuals. In...
| Main Authors: | , |
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/858671571260308391/Thailand-Financial-Sector-Assessment-Program-Technical-Note-Funded-Pension-System http://hdl.handle.net/10986/32610 |
| Summary: | While Thailand’s pension system is
typically described as a multipillar pension scheme, its
design is highly fragmented and offers adequate coverage
only to a small segment of the population, including civil
servants and high-income individuals. In its 2018 Article IV
report, the IMF highlighted the need for a broader pension
reform, including parametric changes and ender
inclusivepolicies to improve female labor force
participation and attenuate the impact of aging on
productivity growth. While these reforms are needed, private
pensions can also play a role inimproving retirement income
for individuals. As agreed with the Thai authorities, this
technical note provides an assessment of the private, funded
components of the pension system. A key component assessed
is the voluntary provident fund scheme (PVD). The PVD scheme
is voluntary and operates as a tax-incentivized scheme,
which allows both employers and employees to take advantage
of generous tax benefits for savings for retirement. This
note also addresses the challenges of the private, funded
system and proposes policy recommendations for increasing
coverage, improving efficiency, and delivering sustainable
retirement income in the payout phase. This note is
organized as follows. The next section provides a brief
description of the current overall pension system, public
and private; Section III provides a diagnostic of the main
challenges in the private, funded system; and Section IV
provides recommendations for optimizing the design of the
private, funded pension system. The focus of the note is to
improve the incentive structure of the private, funded
pension scheme. |
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