14 Jul 69

The Minister of Labour, Mr. Julyang Amarvivat, agreed to propose a new type of "old age pension" calculation, or "CARE formula," into the Cabinet's consideration for approval in principle, with the goal of enhancing fairness in the protection of insurers, reflecting the actual contribution delivery period, and ensuring long-term sustainability for the Social Security Fund.

Miss Kanchana Pulmug, Secretary of the Social Security Administration, revealed that this update of the old age pension formula covers a major issue, starting with the adjustment of the old age pension calculation for those who submit contributions under 12 months from the original return of only contributions on the part of the insurer to receive gratuities from both the part of the insurer and the employer, including remuneration benefits under the same criteria as those who submit contributions from 12 months or more.

In addition, the method of calculating the pension rate for those who submit contributions in excess of 180 months has been adjusted, from the original 1.5 percent increase per 12-month contribution, and the remnant of the month is not calculated. It is changed to 0.125 percent per month increase in the number of months actually remitted, allowing insurers to receive even more benefits in line with the remit period.

Another essence is to adjust the wage base used to calculate pensions, from the average wage of the last 60 months before retirement to the average wage of the entire contribution period, using the historical wage to adjust to the current value before calculating according to CARE principles to reflect the income of the working life, reducing the disadvantage of the income change towards the end of the work.

At the same time, it has established a five-year transitional impact package for those who are about to start pensions and receive pensions based on a new formula below the original formula, receiving compensation at cascading rates starting from 100% in the first year, 80% in the second year, 60% in the third year, 40% in the fourth year and 20% in the fifth year.

After the law goes into effect,

For those who are already pensioners, if, when the new formula is calculated, the benefit is increased, the Social Security Administration will adjust the pension increase for the next period, but there will be no retroactive payment for the past period.

Miss Kanchana said that after the Minister of Labour agreed in principle, the next step would be to put the matter into Cabinet consideration before submitting the draft ministerial rule to the Decree Office for review and to implement the Gazette declaration for further effect.

This improvement of the old age pension formula is a milestone in the development of the Thai social security system to be fair, modern and in line with changing economic conditions, with the future sustainable retirement income guarantees for insurers.