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The Cabinet-approved reform will change how pensions are calculated for insured persons, replacing the final average earnings model with a career-based approach while introducing safeguards during the transition.
Thailand's Cabinet has approved a draft ministerial regulation that will introduce a new method for calculating old-age pensions, replacing the current final salary-based approach with a lifetime earnings model.
The reform, announced by Chulaphan Amornvivat, Minister of Labour following a Cabinet meeting on 14 July 2026, revises how old-age pensions and lump-sum benefits are calculated for insured persons. According to the Ministry of Labour, the changes are intended to better reflect an individual's contributions throughout their working life while strengthening the long-term sustainability of the Social Security Fund.
The draft ministerial regulation will come into effect 180 days after it is published in the Royal Gazette.
A key change is the introduction of the Career Average Revalued Earnings (CARE) formula, which replaces the current Final Average Earnings (FAE) formula.
Under the existing FAE formula, old-age pensions are calculated based on an insured person's average salary over the final 60 months of employment. Under the CARE formula, pensions will instead be calculated using the average salary earned across an individual's entire working life.
To ensure earlier earnings are fairly reflected, past wages will be adjusted to their present value through a Pension Points system before the pension amount is calculated.
The Ministry of Labour said the revised approach is intended to provide insured persons with benefits that more accurately reflect the contributions made throughout their careers.
The draft regulation also revises the criteria for insured persons who have contributed to the Social Security Fund for fewer than 180 months.
Under the new rules, they will receive a pension equivalent to the combined contributions made by both the insured person and the employer, together with accrued interest, even if they have contributed for less than 12 months. According to the ministry, this change is intended to ensure insured persons receive benefits that appropriately reflect their contributions.
To support the transition, the regulation introduces measures to protect the rights of both existing and future pension recipients.
Insured persons who are already receiving old-age pensions before the regulation comes into effect will have their pensions recalculated under the CARE formula. If the new calculation results in a higher pension, they will receive the increased amount from the month following the regulation's implementation. If the recalculation results in a lower pension, they will continue receiving their current pension.
Meanwhile, insured persons who become eligible for an old-age pension within five years of the regulation taking effect will receive transitional compensation if the CARE formula results in a lower pension. The compensation will cover 100% of the difference in the first year and gradually reduce to 20% by the fifth year.
Commenting on the changes, Minister Chulaphan said the revised calculation method will apply to insured persons under both Section 33 and Section 39, allowing pension calculations to more accurately reflect lifetime contributions.
"It is fair, balanced, and consistent with international standards of many countries, especially the OECD, while simultaneously creating long-term sustainability for the social security fund,” he added.
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Lead image / Ministry of Labour
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