Comment on “Public Pension Programs in Southeast Asia: An Assessment”

• DOI: http://doi.org/10.1111/aepr.12102
• Author: Chalongphob Sussangkarn
• Published date: 01 July 2015
• Date: 01 July 2015

Comment on “Public Pension Programs in

Southeast Asia: An Assessment”

Chalongphob SUSSANGKARN†

Thailand Development Research Institute

JEL codes: H55, H75, J26

Asher and Bali (2015) provide an overall assessment of the pension systems in six major

economies of Southeast Asia and suggest some major areas for future reforms. The

demographic trends suggest that many of these countries will soon be facing a popula-

tion ageing problem, leaving a relatively short period to design and implement pension

system reforms that can provide effective coverage and protection to the retirees.

Generally, I think that the paper provides a good overall review and assessment, and I

also agree with most of the main recommendations of the paper. Some comments

follow.

The first thing that attracted my attention is the very first sentence in the paper,

“Current demographic trends suggest that most economies in Southeast Asia will age at

relatively low incomes.” I wonder what the significance of “ageing at relatively low

incomes” is, particularly in the context of the pension system. Is it to do with having

less financial resources to provide for the aged? But then the cost of living will also be

lower in the lower income countries and at the same time life expectancy will tend to be

less than in advanced countries. Also, fiscal positions may also be relatively strong. Possi-

bly, lower income countries will have less developed financial markets providing less

opportunity to achieve adequate returns on retirement funds. In any case, if “ageing at

relatively low incomes” is considered to be significant, there could have been more dis-

cussion of this in the paper.

An important issue, also indicated in the paper, is the presence of a large percentage

of own account and unpaid family workers in the labor force in most Southeast Asian

economies (predominantly in the so-called informal sector). In Thailand, for example,

56% of all those employed in 2012 were own account or unpaid family workers. Integrat-

ing these people into the social security system is difficult. On the other hand, these

workers work and earn income way beyond the regular retirement age. So having a

sizable percentage of these workers in the labor force will somewhat modify the picture

linking the population age structure to old-age dependency on the employment side.

Also, as workers’ health improvesover time they will continue to work longer, almost like

having an automatic increase in the retirement age with an increase in healthy life expec-

tancy. This will make it easier for a country’s pension scheme to look after the retirees,

†Correspondence: Chalongphob Sussangkarn, Thailand Development Research Institute, 565

Soi Ramkhamhaeng 39,Wangthonglang District, Bangkok 10310, Thailand. Email: chalongp@

tdri.or.th

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doi: 10.1111/aepr.12102 Asian Economic Policy Review (2015) 10, 248–249

© 2015 Japan Center for Economic Research248