Private sector employees in the formal sectors are covered under the Social Security Fund (SSF). The old-age benefit scheme under SSF is a defined benefit scheme.
Pensions at a Glance Asia/Pacific 2018
Thailand: Pension system in 2016
Qualifying conditions
The insured (both men and women) who have reached the age of 55 are qualified to get old age benefit. At least 180 months (15 years) of contributions are required for monthly pension receipt and the pension benefit is adjusted for a longer contribution period. For the insured persons with less than 180 months of contribution a lump sum payment equivalent to the total contributions is made. In both cases employment must cease.
Benefit calculation
Earnings-related
Workers accrue 20% of their earnings for the first 15 years and then 1.5% for every year thereafter. The base wage used for benefit calculation is the average wage over the last five years prior to retirement. Indexation rules are discretionary and the modelling assumes price indexation of pensions in payment.
Variant careers
Early retirement
It is not possible to claim the earnings-related pension before the normal age of 55.
Late retirement
It is possible to retire later than the age of 55 and the pension continues to accrue by 1.5%.
Personal income tax and social security contributions
Taxation of workers
There are various tax relief systems and the employed receive a tax deduction of 50% of assessable income up to THB 100 000. Single insured persons receive a personal allowance of THB 60 000. Social security contributions are tax deductible.
Taxation of worker’s income
Annual taxable income | Tax rate |
|---|---|
1-THB 150 000 | 0% |
THB 150 001-THB 300 000 | 5% |
THB 300 001-THB 500 000 | 10% |
THB 500 001-THB 750 000 | 15% |
THB 750 001-THB 1 000 000 | 20% |
THB 1 000 001-THB 2 000 000 | 25% |
THB 2 000 001-THB 5 000 000 | 30% |
THB 5 000 001 and over | 35% |
Social security contributions payable by workers
Insured persons pay social security contributions. For old age pension, the contribution rate is 3% between the floor of THB 1 650 per month and the ceiling of THB 15 000 per month. They also pay 1.5% of earnings for sickness, maternity, invalidity and death benefits and 0.5% of earnings for the unemployment insurance scheme.
Taxation of pensioners
All pension incomes are exempted from taxation. The elderly above 65 who continue working receive an old age tax allowance of THB 190 000.
Social security contributions payable by pensioners
Pensioners do not pay any social security contributions.
Assumptions: Real rate of return 3%, real earnings growth 1.25%, inflation 2%, and real discount rate 2%. All systems are modelled and indexed according to what is legislated. Transitional rules apply where relevant. DC conversion rate equal 90%. Labour market entry occurs at age 20 in 2016. Tax system latest available: 2016.