Thailand Adopts CARE Formula for Fairer Pension Calculations
Thailand's Cabinet approved the CARE formula for pension calculations on July 14, which bases retirement benefits on lifetime earnings rather than final wages, aiming to reduce inequality and ensure fairer payments for all workers.
On July 14, 2025, Labor Minister Julphand Amornvivat revealed that the Cabinet has approved new guidelines for calculating old-age pensions under the CARE (Career Average Revalued Earnings) formula. This initiative aims to create a pension system that genuinely reflects lifetime earnings, ensures fairness, and reduces inequality among workers.
The CARE formula's key innovation is replacing the calculation basis from the average wage of the final 60 months before retirement to an average across the entire contribution period. Past wages will be revalued to current monetary levels before calculation, ensuring pensions reflect true lifetime income and reducing disparities caused by income changes near retirement.
The reform also expands benefits in several ways. Workers who contributed for fewer than 12 months—previously entitled only to their own contributions—will now receive old-age benefits including employer contributions and returns, under the same criteria as those contributing 12 months or longer. For contributors exceeding 180 months, the increase rate changes from 1.5 percent per 12-month period to 0.125 percent per actual month contributed, eliminating month rounding and ensuring benefits match actual contribution periods.
The Labor Ministry has established a five-year transitional support measure for those nearing retirement whose new formula benefits fall short of the old formula. They will receive declining compensation: 100 percent in year one, decreasing by 20 percent annually until year five. Current retirees whose recalculated benefits increase will receive immediate pension adjustments in the next payment cycle. Those whose benefits would decrease will continue receiving the original pension amount for life, protecting existing beneficiaries.
Next steps involve submitting the draft regulation to the Office of the Council of State for review and publication in the Royal Gazette, effective 180 days after publication. The Labor Ministry expects this reform to be a major step toward ensuring stable, fair, and sustainable post-retirement income security for all workers.
