Author Topic: Retirement age extension mulled  (Read 1027 times)

Offline Johnnie F.

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Retirement age extension mulled
« on: December 03, 2012, 02:45:58 PM »

Retirement age extension mulled

Civil servants may be kept in the workforce from 60 to 62 to alleviate the problems of an 'ageing' society
By 2050, when Thailand's population is expected to total 82.5 million, according to the UN's "World Population Ageing: 1950-2050" report, the number of elderly Thais - those aged 60 or older - is projected to reach 22.5 million, or 27.3 per cent of the population.

With more people reaching retirement age and a declining fertility rate leading to fewer young workers, this situation will affect all sectors, particularly Thailand's civil service, which is the "back office" of the main engines driving the Kingdom's economy.

According to the secretary-general of the Office of the Civil Service Commission, Nontikorn Kanjanajitra, this issue is of great concern and must be addressed urgently if public services for all Thais are not to decline in the decades ahead.

"This has been our concern for years, as the average age of civil servants hit 45 years for the first time in 2004," Nontikorn said in an interview last week. The average dropped recently to 43, thanks to the retirement of those members of the "baby boomer" generation. Yet, the situation remains worrisome, taking into account higher life expectancy and lower fertility rates.

More than 2.7 million people now work for the civil service in some capacity, comprising officials in 19 ministries whose salaries are part of the central government budget. Of the 1.65 million with full civil-servant status - qualifying for full benefits - only 42.2 per cent are aged below 40 years. (See graphic.)

The Civil Service Act was amended in 2008 to extend the retirement age by up to 10 years from 60 for civil servants with needed technical or other individual skills - medical and legal, for example. Their retirements will be delayed by four years, with two three-year renewals possible.

Nontikorn said his office is also studying a plan to extend the retirement age of civil servants in other areas. The study, which kicked off about a year ago, is expected to be completed this month and will be presented to the government next year. In the preliminary stage, two options are being considered.

First, the 70-year threshold could be applied to experts working in other fields to address shortages.

Second, the threshold in all fields could be extended from 60 years to 62 years. This may exclude those who do not hold at least a bachelor's degree. Also, for certain positions such as soldiers and police officers, there may be a physical requirement.

"Two benefits from this would be that [the workers'] expertise is retained, and the pension burden would be reduced," Nontikorn said.

In Japan, which has a higher percentage of its population in the elderly range than any other country, the retirement age will be raised to 65 next March, while companies are allowed to pay half-salary to employees aged 60 or more.

Professor Naohiro Ogawa of the Nihon University Population Research Institute said earlier that the extension of retirement age is necessary; no country in the world, Ogawa said, can leave their retirement age unchanged for decades as life expectancy increases. Ogawa noted that if more people are kept in the workforce, their contributions help reduce the government's pension burden, making the pension scheme more sustainable.

Mathana Phananiramai, a former lecturer at Thammasat University who has studied the impact of the ageing population, added that older retirement age would help ensure that retirees have more savings.

Under the Pension Act, Thailand's retirement age has been fixed at 60 years since 1941, when Thais' life expectancy was just 52. Thanks to advances in medicine and other technologies, life expectancy is now 72. Meanwhile, Thailand's fertility rate is well under one, meaning less than one child is born to every couple. Without contributions from those who can still make them, the government is also shouldering extra healthcare expenses on civil servants and retirees, as well as their family members.

About 5 million people are now eligible for the medical services under the Civil Servant Medical Benefit Scheme, according to Health Insurance System Research Office (HISRO) head Dr Samrit Srithamrongsawat. About half are aged over 60, consuming about half of total expenses, which stand at Bt60 billion per annum.

Nontikorn said the burden would only rise as the ageing population demands more healthcare services. This will require more staff, buildings and utility expenses. In addition, the Thai public service will face a human-resource shortage, particularly in the medical area.

"The age gap will only widen, as many civil servants age while we freeze the workforce periodically. We need to seriously rethink the recruitment rules. There must be incentives to facilitate the return of the recently retired to the public service," he said.

The Nation