A significant reform to Thailand’s Social Security Fund is underway, proposing a new pension calculation formula, dubbed ‘Care,’ designed to better reflect individuals’ lifetime earnings and contributions. This proposed change, approved in principle by the cabinet on July 14, is set to impact both current and future retirees, with proponents arguing it will lead to greater fairness and improved benefits for many, particularly long-term voluntary contributors. However, concerns have been raised by some labor groups who fear certain workers might receive reduced pensions under the new system.
Understanding the Care Pension Formula
The core of the ‘Care’ reform lies in how retirement pensions are calculated. Unlike the current system, which primarily bases pensions on a worker’s average earnings over their final 60 months of employment, the Care formula will consider earnings across an individual’s entire contribution history. To ensure accuracy and relevance, past wages will be adjusted to reflect current monetary values before being averaged.
Labour Minister Julapun Amornvivat has championed the reform, stating its aim is to align pension payouts more closely with an individual’s total career contributions, thereby fostering a more equitable system for all insured persons.
Addressing Systemic Inequities
The impetus for this reform largely stems from persistent complaints lodged by members under Section 39 of the Social Security Act. These individuals are former employees who opted to continue their contributions voluntarily after leaving jobs covered by the social security system, in order to maintain their benefit eligibility. Critics of the existing Final Average Earnings (FAE) system contend that it often disadvantages these Section 39 members. Because their benefits are calculated based on a potentially lower contribution base after leaving formal employment, they may receive significantly less in retirement despite decades of consistent contributions.
Furthermore, supporters of the Care formula point out that the current FAE system can also penalize workers whose salaries decline towards the end of their careers, while disproportionately benefiting those whose incomes see a substantial surge in their final working years. The Social Security Office (SSO) asserts that the new approach is intended to provide a more accurate representation of lifetime earnings and resolve long-standing issues of pension fairness.
Key Changes in Pension Calculation
The Care formula introduces two primary modifications to pension calculations:
- Lifetime Average Earnings: Pension entitlements will be determined by the average salary earned throughout an entire working life, rather than just the last five years.
- Monthly Entitlement Accrual: Additional pension benefits will be calculated on a monthly basis. Instead of an annual credit of 1.5% for every 12 months of contributions beyond 180 months, Care will credit 0.125% per month. The SSO emphasizes that this ensures every month of contribution directly contributes to the retirement benefit.
Impact on Other Benefits
Beyond retirement pensions, the proposed reform also alters benefits for individuals who leave the Social Security system before meeting the criteria for a pension. Under the current regulations, those with less than 12 months of contributions only receive a refund of their own contributions. The Care system, however, would entitle eligible individuals to receive not only their own contributions but also the employer’s contributions and any accumulated investment returns.
Who Stands to Benefit Most?
The Care formula is anticipated to provide the greatest advantage to individuals who have contributed to the system for extended periods but experienced lower earnings closer to retirement, as well as Section 39 members. Estimates from the Ministry of Labour suggest that between 600,000 and 800,000 people could see improved retirement benefits.
Assoc. Prof. Sustarum Thammaboosadee, a member of the Social Security Board representing insured persons, highlighted that the reform addresses long-standing inequities. He noted that approximately 70% of current pensioners receive less than 1,708 baht per month, falling below the poverty line, and that around 10,000 retirees pass away annually without receiving what advocates consider an adequate pension.
Points of Opposition and Concerns
Opposition to the Care formula primarily comes from labor organizations representing Section 33 workers – those in formal employment whose contributions are deducted directly from their wages. The State Enterprise Workers’ Relations Confederation, led by Sawit Kaewwan, has voiced concerns that workers whose salaries increased significantly in their final working years might receive lower pensions under Care, as it incorporates their entire earnings history, potentially diluting the impact of higher recent salaries.
Questions have also been raised regarding the extent of public consultation. However, the SSO maintains that the proposal was subject to public input via the government’s legal consultation platform, law.go.th, and a series of public forums held from October 1 to 17, 2025.
Alternative Proposals Considered
During the reform’s review process, various pension calculation methods were evaluated before the Social Security Board settled on the Care formula. A subcommittee, chaired by economist Anusorn Tamajai, explored options such as using average earnings from the final 180 months (15 years), adjusted for inflation and cost-of-living changes. Mr. Anusorn commented that the adopted formula better reflects lifetime contributions, reduces disparities, and enhances the fund’s long-term sustainability.
Independently, campaigners like Dr. Boon Arayapon have critiqued both the existing FAE system and the Care proposal, arguing that neither fully resolves the structural inequities within the Social Security system. Dr. Boon has specifically warned that some Section 33 members might receive lower pensions under Care compared to the current formula, advocating instead for a separate account system that more directly links benefits to individual contributions.
Timeline and Financial Sustainability
The implementation of the Care formula is not immediate. Following the cabinet’s approval in principle on July 14, the proposal requires review by the Council of State before it can become law. The ongoing debate precedes the Social Security Board elections scheduled for September 27, adding a layer of political significance to the decisions affecting millions.
Minister Julapun estimates the legal review process will take approximately eight to ten months. The SSO’s target for implementing the Care formula is 2026, contingent on the legislative process concluding successfully. To mitigate concerns about potential pension reductions, a five-year transition period is proposed. Retirees who would receive a lower pension under Care than the previous system during this period would receive a compensatory top-up, starting at 100% of the difference in the first year and decreasing to 20% by the fifth year.
Ensuring the long-term financial health of the Social Security Fund is a key consideration. The SSO is exploring several measures, including potentially raising the retirement age beyond 55, gradually increasing the current contribution rate (currently 3% from employees, 3% from employers, and 1% from the government), and seeking improved investment returns.
A Debate on Fairness and Future Security
At its heart, the debate surrounding the Care formula revolves around differing perspectives on fairness. Supporters champion the principle that pensions should mirror an individual’s entire career contributions. Conversely, critics argue that individuals who planned their retirement based on existing rules should not face diminished benefits due to a formula change. With nearly 25 million individuals covered by Social Security, the outcome of this reform will profoundly shape retirement security and social welfare policy in Thailand for decades to come.
