Becoming an aged society is a big challenge for Thailand, especially when it comes to welfare provided by existing pension schemes.

According to the United Nations, a country with over 10% of its population aged 60 and older is an ageing society. When this group increases to over 20%, the country becomes classified as an aged society. In Thailand, as of 2015, 10.5 million people, or 16.2% of the 65.2 million population, were aged over 60. Siam Commercial Bank predicts Thailand will become an aged society by 2021.

To make matters worse, many entering old age lack good retirement plans, proper welfare and sufficient pension income. Last week, Bloomberg cited an international study called the Melbourne Mercer Global Pensions Index, which indicated Thailand is at the foot of a table covering 37 retirement income systems, representing more than 63% of the world’s population. The report benchmarks each country’s system using more than 40 indicators.

The study suggested Thailand should introduce a minimum level of mandatory retirement savings and increase support for the poorest. The Netherlands and Denmark have the best pensions systems in the world and took the top two slots, both earning an A grade for the level of financial security they provide in retirement.

Australia came in third, with a B+ grade, while the top 10 was rounded out with Finland, Sweden, Norway, Singapore, New Zealand, Canada and Chile all on B. This report comes as no surprise. Most of the top pension systems are in developed countries, particularly Scandinavian countries where citizens pay high income taxes.

The study should serve as a wake-up call for Thai policymakers. In fact, Thailand has various pension schemes — a system for civil servants, a compulsory system for workers under the Social Security Fund (SSF), a voluntary system of the National Savings Fund (NSF) which covers informal workers, and voluntarily annuity insurance for retirement.

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