Thailand to Invest Fraction of Social Security fund into Global Assets

Thailand's US$77 billion Social Security Fund is set to invest US$11.6 billion into global private assets as part of a strategic overhaul aimed at improving its underwhelming returns, according to an interview with Petch Vergara, a board member of the fund. This move is essential for addressing poor performance amid rising demands from an aging population.

The fund, which supports healthcare, unemployment benefits, and pensions for 25 million Thai workers, has averaged returns of under 3% over the past decade, a rate far below its potential. In response, starting next year, the fund plans to shift away from its heavily domestic-focused and low-risk investments, which Petch, a former Goldman Sachs executive, labeled as unsustainable.

Petch, who joined the fund earlier this year, warned that if the fund continues on its current path, it could face bankruptcy by 2051. She emphasized that the existing portfolio, concentrated in Thai assets, poses risks to long-term growth, as low-risk investments might seem safe in the short term but hinder future potential returns.

This strategy shift comes at a time when Thailand's population is aging rapidly. As of 2023, 20% of the country’s 66 million people were over 60 years old, a sharp rise from 10% two decades ago. The number of elderly citizens has doubled from 6.2 million in 2004 to 13 million by December 2023, further straining the social security system.