You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

July 30, 2026

Thailand Moves to Reform Old-Age Pension Calculations

Subscribe to Updates

Thailand’s cabinet has approved a draft ministerial regulation introducing significant changes to the calculation of old-age pension and old-age gratuity benefits under the Social Security Fund. The reform would replace the current pension calculation method with a career average revalued earnings (CARE) model designed to better reflect an individual’s lifetime contributions while supporting the long-term financial sustainability of the Social Security Fund. The changes are also intended to improve fairness and align Thailand’s pension framework with international practices.

Key proposed changes under the draft ministerial regulation are outlined below.

CARE-Based Formula for Old-Age Pension Calculations

Currently, old-age pensions are calculated based on the insured person’s average salary over the preceding 60 months. The proposed regulation would replace this approach with the CARE model, under which pension benefits will be calculated based on earnings throughout an individual’s entire working life. Historical earnings will be revalued to reflect their present value before the pension benefit is calculated. According to the Ministry of Labor, this change is intended to better align pension benefits with an individual’s lifetime contribution history and provide a fairer basis for calculating benefits.

Pension Accrual Rate for Contributions Exceeding 180 Months

Under the current rules, insured persons who contribute for more than 180 months receive an additional pension accrual of 1.5% for each completed 12-month contribution period, with any remaining months disregarded. The proposed regulation would instead calculate the additional accrual on a monthly basis at a rate of 0.125% of actual monthly contributions; this aims to make pension benefits more accurately reflect the actual duration of each individual’s contribution history.

Transitional Protections for Insured Persons

The draft regulation includes transitional protections for both existing pension recipients and those who will become eligible within five years of the CARE model taking effect.

For existing recipients, the following protections apply:

  • Those whose benefits would increase under the CARE formula will receive the higher amount from the month following the regulation’s effective date, with no retroactive payments for past benefit periods.
  • Those whose benefits would be lower under the new formula will continue to receive their current pension.
  • For insured persons who become eligible for old-age pension benefits within five years of the regulation taking effect, transitional compensation will apply where the new formula results in a lower pension amount. The compensation will cover 100% of the difference in the first year and will gradually decrease, reaching 20% by the fifth year.

Expanded Entitlement to Old-Age Gratuity Benefits

Under the new regulation, individuals with fewer than 12 months of contributions will be entitled to an old-age gratuity equivalent to the combined contributions made by both the employee and employer, together with any applicable investment returns. This is a significant enhancement from the previous framework, under which such individuals were entitled only to the return of their own contributions and related investment income. Eligibility for this benefit will also no longer depend on a minimum contribution period.

Next Steps

The draft ministerial regulation will next be submitted to the Council of State for legal review, after which the Ministry of Labor will proceed with remaining implementation work, including developing the systems needed to support the new CARE-based pension calculation methodology. This process is expected to take approximately eight to ten months. The regulation will then be published in the Government Gazette and will take effect after a 180-day transition period.

As implementation approaches, employers and insured persons covered under Section 33 (employees under compulsory social security coverage) and Section 39 (former employees who voluntarily continue their social security coverage) of the Social Security Act should monitor further announcements from the Social Security Office for updates on the implementation timeline and consider how these changes may affect their future planning.

Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

March 23, 2023
On March 19, 2023, Thailand’s new work-from-home (WFH) legislation amending the Labour Protection Act (No. 8) B.E. 2566 (2023) was published in the Government Gazette. It will come into effect on April 18, 2023. The amendment aims to enhance employee protections to accord with current global standards, provide alternative working arrangements for employers and employees, increase workforce efficiency, and strengthen employees’ job security and a better quality of life. As we detailed previously, the new WFH legislation allows employers and employees to reach agreements that permit employees to work remotely. Since there are no accompanying criminal punishments relating to this new provision, and the legislation incorporates the term “may agree,” it appears that this WFH provision is not mandatory but is primarily intended to facilitate and encourage remote working agreements between employers and employees. For more details on the WFH legislation, or on any aspect of employment law in Thailand, please contact Tilleke & Gibbins at [email protected].
Read More
February 24, 2023
Many companies have moved to Southeast Asia to benefit from the advantages of this vibrant and diverse market. The region is already a manufacturing hub for a multitude of industries—computer and automotive products in Thailand, textiles in Cambodia, and footwear and electrical goods in Vietnam, to name a few—and an increasing number of companies worldwide are reconfiguring their supply chains to include regional suppliers. A key challenge is keeping up to date with employment law trends in these jurisdictions to ensure compliance with local regulations—and avoid costly, time-consuming business interruption. Here we outline trends and recent regulatory developments in Cambodia, Thailand, and Vietnam, and consider what they mean for employers. Cambodia The Ministry of Labour and Vocational Training (MLVT) is likely to pursue a more proactive enforcement strategy in 2023. Last May, the MLVT announced companies would be required to submit a twice yearly self-declaration on labour compliance through a new online system. The self-declaration form requires companies to confirm and upload evidence of compliance, and the MLVT online system—through which the ministry can easily determine if a company is compliant –generates a report that lists all fines. Companies should comply with the self-declaration requirement and carefully review the form to understand what fines will apply for non-compliance. On 1 October 2022, regulations relating to the National Social Security Fund (NSSF) pension system came into effect, and employers and employees began making NSSF pension contributions. Over the next five years, total compulsory pension contributions will amount to 4% of an employee’s wage, half of which is paid by the employer and half deducted from the employee’s salary. The contribution wage is capped at KHR 1.2m (USD 300). Employers are currently required to pay a relatively small amount (KHR 24,000, or around USD 6). This will increase to 10.75% over
Read More
January 19, 2023
The Thai parliament has passed the so-called Work from Home Bill—formally known as Labour Protection Act (No. 8) B.E. 2566 (2023)—which amends the country’s Labour Protection Act (LPA) to reflect current circumstances. The accompanying legislative remark states that the proposed amendments to the LPA will provide additional options for work arrangements between employers and employees, upgrade the level of labor protection, increase work stability, and improve quality of life for employees in Thailand. The legislation adds a single section to the LPA providing that an employer and an employee “may agree in the employment contract” that the employee is allowed “to bring work . . . to perform at home or at the residence of the employee or anywhere that the employee can work remotely through information technology, if the nature of the work permits.” The provision further provides that employers are responsible for ensuring that remote work agreements are in writing, either physically or electronically, and may include the following details: Period of the agreement; Normal working hours, rest periods, and overtime work; Criteria for overtime work, holiday work, and various types of leave; Scope of work and control or supervision by the employer; and Responsibility for arranging supplies and equipment, including necessary costs relating to the work. The amended LPA gives employees who work from home the right to refuse contact from the employer or the supervisor beyond working hours. In addition, employers must treat remote employees equally to on-premise employees. The most notable question surrounding this legislation is whether employers must allow employees to work remotely. The phrase “may agree” suggests that employers do not have to agree to allow an employee to work remotely. Another important aspect of the amendment is that there is no criminal punishment attached to it, which suggests that the legislation
Read More
October 28, 2022
Tilleke & Gibbins employment specialists in Myanmar have contributed an updated Myanmar chapter to Employment and Employee Benefits Global Guide, a Thomson Reuters Practical Law online publication that provides an overview of employment and employee benefits in jurisdictions worldwide. The Myanmar chapter was written by members of Tilleke & Gibbins’ Yangon office, including Yuwadee Thean-ngarm, director; Nwe Oo, senior associate; Sher Hann Chua, consultant; and Kyaw Min Tun, consultant. The chapter covers a wide range of key employment topics, including employment status, background checks, regulation of the employment relationship, minimum wage, working hours and holidays, illness and injury of employees, discrimination and harassment, termination of employment, resolution of employer-employee disputes, redundancy/layoffs, employee representation and consultation, business transfer and insolvency, employee relocation, health and safety obligations, taxation of employment income, intellectual property issues, and more. Practical Law, produced by Thomson Reuters, is the world’s leading legal resource for business lawyers, publishing a huge range of guides for hundreds of jurisdictions and practice areas. The Employment and Employee Benefits Global Guide covers 46 jurisdiction around the world, with Tilleke & Gibbins also providing the Vietnam chapter of the guide. To view the latest version of the Myanmar chapter, please visit the Practical Law website.
Read More