Cabinet frets over early pension plan

Cabinet ministers voiced their concerns that a legal amendment being pursued could destabilise the Social Security Fund (SSF).

During the cabinet’s weekly meeting yesterday, a proposal was raised to amend the Social Security Act to allow subscribers to get an advance on their pension or use the pension as collateral for bank loans, government spokesman Thanakorn Wangboonkongchana said.

The proposed amendment, tabled by the Labour Ministry, was approved yesterday despite reservations from some cabinet members.

Labour Minister Suchart Chomklin said the revisions were meant to offer financial relief for SSF members struggling through the economic slump brought about by the Covid19 pandemic.

The changes have yet to be scrutinised and passed by parliament.

If that happens, SSF members can choose between obtaining their pension in one lump sum or monthly for the rest of their lives.

However, to make the choice, they must have contributed to the SSF for 180 months, be at least 55 years old and have left their jobs, according to the Social Security Office (SSO).

The changes also make it possible for SSF subscribers to get a partial advance on their pension. Details of how much they are entitled to will be fleshed out in a ministerial regulation, in a way that does not compromise their pension security.

Moreover, the amendments permit SSF members to use part of their pension as collateral for a bank loan.

The partial advance and collateral are permissible only during an economic crisis, national calamity or pandemic.

Mr Thanakorn said about 5 million SSF members are expected to opt for a partial advance. If each were to seek 30,000 baht, the fund would have to set aside 150 billion baht for the payouts.

The SSO has calculated that the 150 billion baht would translate as a loss of about 6.7 billion baht, which would have otherwise generated profits if it had been invested.

During yesterday’s meeting, Mr Suchart spent half an hour explaining the principles behind the draft amendments.

Some ministers were worried if too many members took out the advance, it would leave the SSF vulnerable to collapse. They also inquired about the underlying concept of tampering with the SSF and how much interest would be charged for loans that use members’ own pensions as collateral.

Mr Suchart insisted the SSF would remain financially sound. He said the loan would wean people off borrowing from predatory lenders who impose exorbitant interest rates.

Some people desperately need the advance and the loan in this case bodes well for them, he said.

In the end, the cabinet agreed there was no risk to the SSF’s stability and decided the draft amendments would be of help to the public.