The cost of living in Thailand is increasing continuously due to the economy’s growth. While we may have enough income to cover our expenses now, we may not feel the impact on our lifestyle significantly. However, in the future, the "elderly allowance" may not be sufficient to cover basic living expenses. It is essential to plan and save enough money for retirement to ensure financial security in the future.
Today, we will take everyone back to review the process of increasing the pension for the elderly to see if it will be sufficient in the future. And invite everyone to plan their finances for post-retirement life with 'retirement insurance'.
Before we go to see the trend of increasing the elderly living allowance to determine if it will be sufficient in the future, let's first take a look at the current inflation situation in Thailand to see how concerning it is.
The current inflationary situation is affecting the cost of living.
Mr Poonpong Naiyanapakorn, Director of the Office of Trade Policy and Strategy (OTPS), Ministry of Commerce, revealed that the Consumer Price Index (CPI) for July 2014 was 108.71, an increase of 0.19% from June 2014 and 0.83% from July 2013, marking the fourth consecutive positive month. Overall CPI for the first seven months of 2014 (Jan-Jul) increased by 0.11%, with the July 2014 CPI increase of 0.83% attributed to the rise in prices of food and non-alcoholic beverages by 1.27%.
● Ready-to-eat food includes instant noodles, rice with curry, breakfast, and made-to-order food.
● Fresh fruit includes rambutan, durian, mango, watermelon, cantaloupe, and guava.
● Rice, flour, and products made from flour include jasmine rice and glutinous rice.
● Fresh vegetables include tomatoes, coriander, ginger, pumpkins, and cucumbers.
● Egg and Dairy Products include chicken eggs, fresh milk, and soy milk.
● Beverages without alcohol include instant coffee, coffee, and sweetened water.
● The food processing equipment group consists of sugar, ready-made coconut milk, and dried/grated coconut.
The current inflation situation in Thailand, which we mentioned earlier, shows that products with increasing prices have impacted the cost of living. These are essential consumer goods in daily life. In the following months, inflation is expected to rise even higher. Therefore, we are still determining if our savings will be enough for retirement.
However, for those who think that our regular savings, when combined with the pension that will be received in the future, will be sufficient for future expenses, we would like to take you to see the pension timeline from the past to the present over more than 30 years to see how much it has increased, to be used in financial planning together.
Timeline of elderly allowance development
● In 1992, 200 baht was provided as welfare to elderly people in need aged 60 years and older.
● In 1999, the life insurance premium was increased to 300 baht.
● In 2001, conditions were added for elderly individuals residing in the local administrative area who had insufficient income for livelihood, were abandoned, lacked caregivers, or were unable to work. The unchanged livelihood allowance is 300 baht per month per person.
● In 2006, the amount was increased to 500 baht per month.
● In 2010, There was a full-time elderly living allowance of 500 baht per month per person. Amendments to the Elderly Persons Act allow for the expansion of the living allowance policy to cover all elderly persons comprehensively at a rate of 500 baht per person per month, with the condition that they must be Thai citizens residing within the jurisdiction of local administrative organisations and not receiving any other welfare benefits or privileges from government agencies.
● In 2012–2023, Adjust the allowance rate from fixed to ladder rates.
○ Age 60–69 years receive 600 baht per month per person.
○ Age 70–79 years receive 700 baht per month per person.
○ Age 80–89 years receive 800 baht per month per person.
○ Aged 90 years and above receive 1,000 baht per month per person.
When the elderly allowance is not in line with inflation and high living expenses.
Elderly people need a sufficient income to support themselves at retirement age, which is adequate for necessities. Research shows that the minimum expenditures for elderly people nationwide are around 1,500 Baht per month, higher than the current maximum pension of 1,000 Baht per month. This amount is only available for those aged 90 and above. Significantly, elderly retirement has not been increased for more than ten years, while the cost of living has risen dramatically. Therefore, planning and saving for retirement to ensure a better quality of life is crucial and should be prepared for starting now.
Change savings into retirement savings for a better quality of life.
Planning for retirement savings can be done in various ways. Buying "retirement insurance" is another way to save money and help generate income for us after retirement. Retirement insurance does not provide returns along the way but gradually pays benefits in installments during retirement age, with many advantages as follows:
Advantages of retirement insurance
● Received monthly pension:
Pension insurance guarantees a regular income after retirement. The insurance company will pay benefits after age 55 or 60 (depending on the policy) until at least 85.
● Help create financial discipline after retirement:
Gradually receiving instalment benefits will help us plan our finances better in old age. If we do not have any other income and spend all our money before the next instalment arrives, we may face financial difficulties, especially in situations like needing to go to the hospital.
● Tax deduction:
You must purchase an insurance policy that provides coverage for at least ten years and specify that a retirement life insurance policy is eligible for tax deduction.
● Protection against the risk of death
In cases where the insured person passes away before the appropriate age, we can specify the beneficiary as desired. The benefits received from the life insurance policy will also be tax-exempt.
However, planning for retirement by saving money and purchasing retirement insurance not only helps us have savings for living expenses in the future after retirement but also gives us peace of mind that if we get sick with illnesses that are more likely to occur as we age, we will have money for treatment without impacting our monthly expenses.