Labour Minister Julapun Amornvivat's recent remarks signalling his willingness to move ahead with the Career-Average Revalued Earnings (CARE) pension formula are commendable. If officially adopted, the CARE policy would allow the government to correct one of the Social Security Fund's (SSF) most persistent injustices.
Mr Julapun appears ready to rise to the occasion. Previous governments have shied away from addressing the issue, fearing opposition from sections of the labour movement, particularly unions concerned that the reform could reduce benefits for some of their members.
The political sensitivity is understandable. But reforms needed to restore fairness and correct long-standing injustices should not be delayed simply because they face opposition from some quarters.
Under the current formula, many workers who contributed to Section 33, the compulsory Social Security scheme for salaried employees, throughout their careers are penalised after retirement. To retain healthcare and other benefits, they continue making voluntary contributions under Section 39.
Yet when they claim their old-age pension, the calculation shifts to the Section 39 contribution base of just 4,800 baht a month, replacing the 15,000-baht ceiling that applied throughout most of their working lives under Section 33.
The consequence is stark: workers who faithfully contributed for decades can see their monthly pension reduced to little more than 1,000 baht.
Worse, the Social Security Office (SSO) has actively encouraged workers leaving Section 33 to enrol in Section 39 without informing them that their pension benefits could be reduced.
The unfairness of this practice was highlighted in a recent landmark Supreme Court ruling.
The court ruled in favour of a Section 39 contributor whose monthly pension had been reduced to just 1,320 baht after the SSO calculated it using the Section 39 contribution base rather than the higher Section 33 base. It ordered the pension to be recalculated using the Section 33 contribution base, restoring fairness in that individual case.
Although the ruling applied only to that case and did not alter the SSO's regulations, it sent a clear message: the existing pension formula has a serious flaw.
Still, no reform comes without trade-offs.
Critics argue that the CARE formula would disadvantage those who planned their retirement around the existing rules, particularly individuals who increased their contribution base during the final five years before retirement. Their concerns should not be dismissed. Any transition should include appropriate safeguards for those who may be adversely affected.
Public policy, however, should not preserve an inequitable system simply because some have learned to benefit from its flaws. The primary objective of pension reform should be to ensure that retirement benefits reflect lifetime contributions, not the timing of higher contributions during the final years of employment.
The labour minister should move swiftly to submit the proposal to the cabinet. The government must demonstrate the political courage to approve this long-overdue reform.
Millions of contributors deserve the assurance that decades of faithfully paying into the system will be recognised when they retire. They have waited long enough.
