New pension formula promises fairer retirement benefits

New pension formula promises fairer retirement benefits Small Medium Large 1 Thailand General New pension formula promises fairer retirement benefits Care plan may benefit hundreds of thousands of retirees PUBLISHED : 25 Jul 2026 at 09:35 NEWSPAPER SECTION: News WRITER: Wisawaporn Jukgoljun Small Medium Large 1 Photo: 123RF The cabinet approved in principle the Career Average Revalued Earnings (Care) formula, a major reform of the Social Security pension system aimed at addressing long-standing complaints over unfair retirement benefits.The reform would change how pensions are calculated, affect both future retirees and existing pensioners, and reshape the long-term finances of the Social Security Fund. Supporters say Care will better reflect workers' lifetime contributions and improve benefits for hundreds of thousands of retirees, particularly Section 39 members.

Critics argue that some workers could receive lower pensions and question whether the reform addresses deeper structural problems. Here are eight key questions and answers. 1.

What is the Care formula? The Care formula changes how Social Security pensions are calculated. Instead of relying mainly on a worker's final 60 months of earnings before retirement, Care uses earnings from the worker's entire contribution history.

Past wages are adjusted to current values before being averaged. Labour Minister Julapun Amornvivat has described the reform as an effort to make pensions more closely reflect lifetime contributions and create greater fairness among insured persons. 2.

Why replace the current system? The push for reform has been driven largely by complaints from Section 39 members, former employees who left jobs covered by the Social Security system but continued making voluntary contributions to maintain their benefits. Critics of the current Final Average Earnings (FAE) system say many Section 39 members end up receiving lower pensions because their benefits are calculated using a lower contribution base after leaving formal employment, despite decades of contributions.

Supporters of Care say the existing formula can also disadvantage workers whose earnings fall near retirement while favouring those whose salaries rise sharply in their final working years. The Social Security Office (SSO) says the reform is intended to better reflect lifetime contributions and address long-standing concerns over pension fairness. 3.

How will pensions be calculated under Care? Care introduces two major changes. First, pension calculations will be based on an average salary earned throughout the entire working life rather than only the final five years.

Second, additional pension entitlements will be calculated monthly rather than annually. Instead of adding 1.5 percentage points for every extra 12 months of contributions beyond 180 months, Care credits 0.

125 percentage points per month. The SSO says this ensures every month of contributions counts towards retirement benefits. 4.

What other benefits change under the proposal? The reform also affects workers who leave the Social Security system before qualifying for a pension. Under current rules, workers with fewer than 12 months of contributions receive only their own contributions back as a lump-sum payment.

Under Care, eligible workers would receive their own contributions, employer contributions and accumulated investment returns. 5. Who is expected to benefit most?

The biggest beneficiaries are expected to be workers who contributed for long periods but experienced lower earnings near retirement, as well as Section 39 members. Labour Ministry estimates suggest that between 600,000 and 800,000 people could benefit. Assoc Prof Sustarum Thammaboosadee, a Social Security Board member representing insured persons, said the reform addresses inequities that have affected retirees for years.

He noted that about 70% of pensioners currently receive less than 1,708 baht a month, below the poverty line, while around 10,000 retirees die each year before receiving what advocates consider an adequate pension. 6. Why do some groups oppose Care?

Opposition comes mainly from labour organisations representing Section 33 workers, employees in formal employment who contribute through payroll deductions. The State Enterprise Workers' Relations Confederation, led by Sawit Kaewwan, said workers whose earnings rose substantially during their final working years could receive lower pensions because Care takes into account their entire earnings history. He also questioned whether sufficient consultation had taken place and said workers who planned their retirement under the existing rules should not lose benefits because of a change in the formula.

On July 21, Mr Sawit and members of the labour network submitted a petition to Prime Minister Anutin Charnvirakul at Government House, seeking government intervention beyond the Ministry of Labour. However, the SSO says the proposal underwent public consultation through the government's leg