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 legal consultation platform, law.go.th, and a series of public forums held between Oct 1 and 17, 2025.
7. Are there alternative proposals?
Yes. During the review process, different approaches to pension reform were considered before the Social Security Board settled on the Care formula.
A Social Security subcommittee chaired by economist Anusorn Tamajai studied ways to improve pension fairness, including using average earnings from the final 180 months (15 years), adjusted for inflation and changes in the cost of living. The review formed part of the broader process that led to the adoption of the Care formula.
Mr Anusorn said the formula would better reflect workers' lifetime contributions, reduce disparities among insured persons and strengthen the long-term sustainability of the Social Security Fund.
Separately, campaigners led by Dr Boon Arayapon have criticised both the current FAE system and the Care proposal, arguing that neither fully addresses structural inequities in the Social Security system. He has warned that some Section 33 members -- private-sector employees whose contributions are deducted directly from their wages -- could receive lower pensions under Care than under the existing formula. He advocates a separate account approach that more directly links retirement benefits to individual contributions.
8. When will Care take effect and can the fund afford it?
Not immediately. Although the cabinet approved the proposal in principle on July 14, it must still be reviewed by the Council of State before becoming law. The debate is unfolding ahead of the Social Security Board election scheduled for Sept 27, adding political significance to decisions affecting millions of contributors and beneficiaries.
Labour Minister Julapun said the legal review is expected to take about eight to 10 months. The SSO aims to implement the Care formula in 2026, although the final timeline will depend on completion of the legislative process.
To ease concerns about potential pension reductions, the government has proposed a five-year transition period. Workers who retire during the first five years after implementation and receive a lower pension under Care than under the previous formula would receive compensation. The top-up would cover 100% of the difference in the first year, gradually declining to 20% by the fifth year.
The Social Security Board is also studying measures to ensure the fund remains sustainable in the long term. Options under consideration include raising the retirement age above 55, gradually increasing the current contribution structure of 3% from employees, 3% from employers and 1% from the government, and seeking higher investment returns.
The debate over Care ultimately centres on competing views of fairness. Supporters believe pensions should reflect contributions made throughout a worker's career, while critics say workers should not face lower benefits after planning their retirement under the existing system.
With nearly 25 million people covered by Social Security, the outcome will shape retirement incomes and retirement policy for decades to come.