BANGKOK, Thailand – The Cabinet has approved in principle a draft ministerial regulation from the Ministry of Labour to restructure the Social Security Fund’s old-age pension calculations. The new CARE (Career Average Revalued Earnings) formula is designed to reduce inequality, promote fairness, and better reflect actual contributions while supporting the fund’s long-term sustainability.
Minister of Labour Julapun Amornvivat stated that the overhaul will revise key calculation methods to align with international standards, especially those of the OECD. For contributors with less than 12 months of service, the lump-sum payout will now include both employee and employer contributions, plus accrued yields, matching the criteria for those with more than a year of service.
For those contributing for more than 180 months, the pension increment will change from an annual 1.5% rate to a monthly rate of 0.125% per month contributed, ensuring all months are counted. The wage base will shift from the average of the final 60 months before retirement to a career-average model. Past wages will be adjusted to current value, providing a fairer reflection of lifelong earnings and addressing disadvantages from late-career income declines.
To ease the transition, a five-year measure will offer sliding-scale compensation for new retirees who would receive less under the new formula. This top-up will start at 100% in the first year and decrease by 20% each year. Existing pensioners whose benefits increase under the CARE formula will see adjustments in future payouts, but retroactive payments will not be made. The regulation will take effect 180 days after publication in the Royal Gazette. (NNT)
