Thai Pension System

The first pension system in Thailand was initiated in 1902 by King Rama V for the well-being of all government officials after their retirements. It was the defined benefit scheme which was funded by the annual government budget, granting pensions to all government officials, and was based on the last month salary. The pay-as-you-go scheme continued for almost a century but the inherent and increasing financial burden urged the Thai government in 1990s to strengthen its sustainability by adopting the World Bank’s Multi-Pillar of Old Age Security.

Thailand’s pension system was completely restructured in late 1990s.

1st Pillar

Old Civil Service Scheme and Social Security Fund make up the 1st pillar or state pension, which is intended to secure the basic needs.

2nd Pillar

The 2nd pillar consists of the Government Pension Fund. The Government Pension Fund (GPF) is a defined contribution pension system for civil servants.

3rd Pillar

The 3rd pillar is a privately-financed personal provision and is voluntary. Provident Fund is an occupational pension. Unlike normal savings, it is incentivized with tax advantages and can be used as a means of closing pension gaps. In addition, voluntary retirement saving can be made through personal saving plans, including the Retirement Mutual Funds, which is opened for all including the employees not covered by provident funds.

In 2015, the government introduces the National Saving Fund (NSF), a new voluntary retirement savings program. It is intended to cover Thai citizens who are not covered by any pension schemes especially the informal workers.