Thailand is preparing for one of the most significant changes to its Social Security pension system in years. The Cabinet has approved in principle the Career Average Revalued Earnings (CARE) formula, a proposal designed to change how retirement pensions are calculated. The reform aims to make pension payments better reflect a worker’s lifetime contributions rather than focusing mainly on earnings during the final years before retirement.
Supporters believe the new formula will create a fairer system for hundreds of thousands of retirees, particularly Section 39 members. However, some labor groups argue that certain workers could receive smaller pensions under the new calculation method. Here’s what the proposed reform means and how it could affect future retirees.
CARE
The Career Average Revalued Earnings (CARE) formula changes the way Social Security pensions are calculated.
Instead of relying primarily on a worker’s final 60 months of salary before retirement, CARE uses earnings from the individual’s entire contribution history. Earlier wages are adjusted to reflect current values before an average is calculated.
According to the Ministry of Labour, the goal is to ensure pensions more accurately reflect lifetime contributions and improve fairness across the Social Security system.
Reason
The proposed reform comes after years of concerns about the existing Final Average Earnings (FAE) system.
One of the biggest concerns has involved Section 39 members. These are workers who previously held jobs covered by Social Security but later left formal employment and continued making voluntary contributions.
Under the current system, many Section 39 members receive pensions based on a lower contribution level after leaving their jobs, even if they contributed for decades beforehand. Supporters of CARE argue that this creates an unfair outcome.
The current formula can also disadvantage workers whose salaries decline before retirement while benefiting those whose incomes increase sharply during their final working years.
Changes
The CARE proposal introduces two major changes to pension calculations.
First, pensions will be based on average earnings throughout a worker’s entire career rather than only the final five years.
Second, additional pension benefits will be calculated monthly instead of annually.
Rather than adding 1.5 percentage points after every 12 additional months beyond 180 months of contributions, the new formula credits 0.125 percentage points for each extra month worked.
The Social Security Office says this ensures every month of contributions counts toward retirement benefits.
Benefits
The proposal also changes benefits for workers who leave the Social Security system before qualifying for a monthly pension.
Currently, 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:
| Current System | CARE Proposal |
|---|---|
| Employee contributions only | Employee contributions |
| No employer share | Employer contributions included |
| No investment returns | Investment returns included |
Supporters say this approach provides greater value for workers who leave the system early.
Winners
Government estimates suggest between 600,000 and 800,000 people could benefit from the reform.
The largest gains are expected for:
- Section 39 members.
- Workers with long contribution histories.
- Employees whose earnings declined near retirement.
Social Security Board member Assoc. Prof. Sustarum Thammaboosadee said many current pensioners receive less than 1,708 baht per month, an amount considered below the poverty line. Supporters argue the CARE formula could help address these long-standing disparities.
Concerns
Not everyone supports the proposal.
Several labor organizations representing Section 33 employees have expressed concerns that workers whose salaries increased significantly toward the end of their careers could receive smaller pensions because the new formula considers their entire earnings history.
Critics also argue that employees who planned their retirement under the current rules should not lose expected benefits because of a policy change.
In response, the Social Security Office says the proposal went through public consultation using the government’s legal consultation platform and multiple public forums during October 2025.
Alternatives
Before selecting the CARE formula, several alternative approaches were reviewed.
One proposal recommended calculating pensions using average earnings from the final 15 years instead of the entire career, with adjustments for inflation and cost-of-living changes.
Other campaign groups argue that both the current system and CARE fail to fully resolve structural issues within the Social Security system. Some have proposed creating separate retirement accounts that directly link benefits to each worker’s individual contributions.
These discussions remain part of the broader debate over long-term pension reform.
Timeline
Although the Cabinet has approved the proposal in principle, the CARE formula has not yet become law.
The legislation must still be reviewed by the Council of State before implementation.
The Ministry of Labour expects the legal review to take approximately eight to ten months. If approved, the Social Security Office hopes to introduce the new formula during 2026.
To reduce the impact on workers who could receive smaller pensions, the government has proposed a five-year transition period.
| Year After Implementation | Compensation for Pension Difference |
|---|---|
| Year 1 | 100% |
| Year 2 | 80% |
| Year 3 | 60% |
| Year 4 | 40% |
| Year 5 | 20% |
During this period, retirees who receive lower pensions under CARE than under the previous formula would receive compensation covering part of the difference.
Sustainability
The Social Security Board is also examining ways to maintain the long-term financial health of the pension fund.
Among the options being considered are increasing the retirement age beyond 55, adjusting contribution rates paid by employees, employers and the government, and improving investment returns.
These measures are intended to support the fund as Thailand’s population continues to age and retirement costs increase over time.
The proposed CARE pension formula represents one of the most significant reforms to Thailand’s Social Security system in recent years. By shifting pension calculations from the final five years of earnings to a worker’s entire contribution history, the government aims to improve fairness while strengthening the long-term sustainability of the pension fund.
Although many workers could benefit from the change, questions remain about its impact on employees whose salaries increased later in their careers. As the legislation moves through the legal process, the final details will determine how the reform shapes retirement benefits for millions of Thai workers.
FAQs
What is the CARE pension formula?
It uses lifetime earnings to calculate pensions.
Who benefits most from CARE?
Mainly Section 39 members and long-term contributors.
When could CARE take effect?
The government aims for implementation in 2026.
Will everyone receive higher pensions?
No. Some workers may receive lower benefits.
