The country\u2019s largest state fund supports 25 million citizens\u2019 healthcare, unemployment benefits and pensions<\/p>\n
Published Wed, Mar 18, 2026 \u00b7 09:30 PM<\/p>\n
[BANGKOK] Thailand\u2019s US$88 billion pension fund urgently needs to reform its governance and diversify its investments, two of the fund\u2019s executives told Reuters. <\/p>\n
This comes after a recent sell-off triggered by the Middle East conflict raised a warning about massive loss risks.<\/p>\n
The country\u2019s largest state fund, managed by the Social Security Office, supports the healthcare, unemployment benefits and pensions of some 25 million Thais.<\/p>\n
The value-at-risk metric \u2013 a measure of maximum tolerable portfolio loss risk \u2013 breached its 8 per cent threshold on Mar 9. Sustarum Thammaboosadee, a board member of the Social Security Office, said this was largely due to its exposure to Thai equities.<\/p>\n
Thailand\u2019s benchmark share index has fallen sharply since the start of the US-Israeli war against Iran, driven by panic selling. An 8 per cent drop on Mar 4 set off a market \u201ccircuit breaker\u201d for the first time since the Covid-19 pandemic.<\/p>\n
Sustarum noted that the impact \u201cexceeded our value-at-risk limit for the first time in two years\u201d, referring to an internal model that assesses volatility based on a number of factors and monitors risk limits.<\/p>\n
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As at December 2025, Thai equities made up 7 per cent of the fund\u2019s portfolio, which remains heavily invested in government and state enterprise bonds, as well as low-risk assets.<\/p>\n
Structural challenges<\/p>\n
Phantira Vergara, another member of the fund\u2019s investment board, highlighted longstanding structural issues, including limited diversification and bureaucratic decision-making.<\/p>\n
\u201cWe are basically where Malaysian pension funds were 10 years ago,\u201d she said, adding that countries such as Japan, South Korea and Malaysia have long implemented reforms that Thailand has yet to address.<\/p>\n
She said that the returns on some portions of the fund\u2019s portfolio have been so low that they could barely be called investments, and the fund must seek higher returns to handle expected global shocks as well as the demands of an ageing population.<\/p>\n
\u201cWe have the potential to be the next Malaysian or South Korean pension fund in Asia if we are able to fix our problems,\u201d Phantira noted, citing other countries\u2019 professionally managed, independent funds.<\/p>\n
Formerly an executive director at Goldman Sachs, she previously said that the fund aimed to reduce allocations of low-risk assets to 60 per cent from more than 70 per cent, while increasing higher-risk investments to 40 per cent. <\/p>\n
That would include allocating US$11.6 billion to global private assets, such as private equity and hedge funds.<\/p>\n
The fund aims for a balanced 50-50 portfolio by 2027 to improve returns, as the country faces rising demand from an ageing population. However, progress has been slow, with low-risk assets still accounting for 69 per cent of the portfolio.<\/p>\n
Calls for diversification<\/p>\n
The fund\u2019s portfolio remains heavily concentrated in Thailand, leaving it exposed to domestic market fluctuations, Phanthira said.<\/p>\n
Around 40 per cent of its overall investment is in foreign markets; 60 per cent is in domestic assets, including bank savings.<\/p>\n
\u201cWhen Thai markets perform well, they still tend to underperform global assets,\u201d she said. \u201cWithout broader global diversification, we miss opportunities compared with other pension funds.\u201d<\/p>\n
She pointed to South Korea\u2019s national pension fund, which recorded a return of 18.8 per cent in 2025 due to its broader exposure to international assets.<\/p>\n
Sustarum of the Social Security Office noted that the fund\u2019s structure as a government agency under the Labour Ministry also restricts its ability to respond quickly to global shocks, such as the ongoing Middle East conflict.<\/p>\n
\u201cIn other pension funds, there would be a process to inform the public about how the fund is managing the volatility,\u201d he said. \u201cBut for us, it is a closed system that lacks flexibility and transparency.\u201d<\/p>\n
The Social Security Office has defended its management of the fund, saying it remains financially sound. Spokesperson Niyada Seneemanomai said that the office has a reasonable degree of flexibility and can hire professionals on competitive salaries.<\/p>\n
Meanwhile, reform advocates argue that independent, professional governance is critical for long-term sustainability, and some have called for more transparency and oversight.<\/p>\n
They proposed structural changes such as giving insured workers greater representation on the fund\u2019s board and changing the management to an independent body of professional fund managers for better returns.<\/p>\n
\u201cUnder the current structure, it not only makes it harder to manage risk during global crises, but also prevents the fund from fully capitalising on opportunistic investments,\u201d Phantira said. REUTERS<\/p>\n
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