1

Pension Fund Industry in Thailand

Chaibhondh OsataphanChairman

Association of Provident Fu nd Manager

Thailand

First International Pension Fund Conference- 1 3 1 4 April 2 0 0 0

Hotel Ritz, Madrid, Spain

2

Thailand’s Population and Labor force

610Total Population = . milllll

- l ll= 2 8 . 2llll

= 3 2 .8Labor Force milllll

: = 6 8 =7 2F yrs

lllll lllll

38%

14% 31%

8%

9%Agricultural SectorSelf EmployedPrivate Business SectorGov. & State Enterprise SectorUnemployed

126. million 4 .6 million

102. million 26. million 28. million

3

Demographics

Under 20

35%

60 and over

9%

20 to 59

56%

Under 20

24%

60 and over

18%

20 to 59

58%

1999 2020

6 1workers: retiree 3 : 1workers retiree

4

The Current Pension Pro grams in Thailand

• - - 1 56st pillar Old Age Pension Fund . mi. people lllllll llll~8.8

• - - lllllll llll2 .1.1 . ~1 17.4• - - 3 . 0.1 .rd pillar Gov Permanent Employees Fund mi• - - - 3 02rd pillar State Owned Enterprises Fund . mi.

• - - 3 07rd pillar Private sector Fund . mi.

- lll llll llllllll l lllll llllllll 7( 23% )30 4.4 (& . ) ( 8 )

6% of GDP

1782~ . billi onBaht

5

- 3rd pillar Pension Funds’ Investment Portfolio

31 1999As at December ,

Cash & Deposits 31.89% Government Bond 13.92%

Debt Instrument Guarantee by MOF 7.51% Bank Acceptance 3.10%

Debt Instrument issued by Bank 14.37% Debt Instrument issued by Finance Co. 7.82%

Other Debt Instrument 6.49% Unit Trust 4.82%

Stock & Corporate Debenture 9.83% Other Assets 0.25%

llll: 1 78 ,1 6 2 .2 7 ( ~ 4 .6 9 ) Invested in domestic market only

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MAIN CONCERNS&FUTURE REFORM• CONCERNS:• Allows cross border inv

estment.• Mobility of pension fund

.• Individual choice of inv

estments.• Minimum vesting sched

ule for employer contributions.

• Provides annuities insurance .

• Individual Retirement Fund.

• FUTURE REFORMS:• Raise normal retirement

age from 55 to 60 for 1 st pillar

• Extends coverage of 1 st pillar to smaller employers & self employed.

• Introduce 2nd pillar for private sector.