Early Retirement Decisions and Social Security Pension Fund in Thailand: A Monte Carlo Approach to Fiscal Implications

Euamporn Phijaisanit

Institutions and Economies (formerly known as International Journal of Institutions and Economies), 2016, vol. 8, issue 1, 62-83

Abstract: This research paper employs the Monte Carlo experiments to assess the fiscal implications of early retirement decisions on the Social Security Pension Fund in Thailand. Most studies which have discussed this topic had employed a non-stochastic approach and emphasises the impacts of changing demographic structure of the workforce. This paper employs a stochastic approach and raises the more urgent issue of fiscal impacts and implications of the early exit from the workforce starting from 2014, the year in which the Fund started paying out regular monthly old-age benefits. The models simulate randomly distributed rates of early retirement among those aged between 50 and 54 with the mean around 5% and standard deviation of 1%. The simulations show that, on average, the Fund starts accruing net liability in 2020, and can potentially become depleted in 2058. This pinpoints to the important policy precautions that the currently high level of reserves does not imply fiscal security for the future retirees and, therefore, an urgent consideration of reform options is vital.

Keywords: Stochastic Analysis; Early Retirement; Pension Funds (search for similar items in EconPapers)
JEL-codes: H50 H55 I31 I38 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:umk:journl:v:8:y:2016:i:1:p:62-83

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