Social Security Fund board deems pension formula ‘too complicated,’ to be revised and re-submitted after rejecting plan affecting 300,000 insured

The Social Security Fund (SSF) Board has halted consideration of a newly proposed pension formula, deeming it overly complex. After the recent board meeting, Assoc Prof Sustarum Thammaboosadee, a member of the SSF Board and coordinator of the Progressive Social Security Team, expressed regret for not persuading fellow board members to adopt the society’s proposal. He pledged to sustain efforts to push the proposal forward at the next gathering scheduled for March. The decision carries implications for more than 300,000 insured individuals under Section 39, who were formerly employed and continued to contribute to the SSF by making personal insurance payments. The planned pension formula would have tied benefit calculations to inflation and fluctuations in the cost of living, adjusting the payout in line with price changes over time. For instance, the portion of benefits previously computed from a salary level of 5,000 baht two decades ago would be recalibrated to reflect today’s inflation rate.

The Rejection and Its Immediate Rationale

The SSF Board’s verdict was explicit: the proposed pension formula was deemed too intricate to be implemented without compromising clarity, fairness, or administrative feasibility. In the wake of the decision, supporters of the reform faced the need to revisit the calculation framework and to devise a version that would be more transparent and easier to administer while preserving the intended policy goals. This outcome underscores a tension that often arises in pension reform efforts—striving for a formula that is both sophisticated enough to reflect macroeconomic realities and simple enough to be understood and executed by a diverse group of stakeholders, including employers, employees, and the managing institutions.

The discussion that followed underscored the practical challenges of translating inflation-adjusted metrics into a life-cycle pension framework. The proposal was built on the premise that benefits should rise in step with cost-of-living pressures, thereby maintaining purchasing power for retirees in a changing economy. However, proponents acknowledged that the mechanics of applying such indexing over long horizons could become unwieldy, especially given the administrative complexities of scenario modelling, data collection, and ongoing recalibration required to keep the system financially stable. The board’s stance reflects a cautious approach, prioritizing a workable solution over a potentially ideal but impractical design that could introduce bureaucratic friction or unintended equity concerns.

In explaining the outcome, Assoc Prof Sustarum Thammaboosadee stressed that the setback would not deter the broader reform agenda. He indicated that the team would refine the framework and present an updated version at the March meeting. This indicates an ongoing commitment to address both the equity objectives of the reform and the operational realities faced by the SSF in implementing a more dynamic pension calculation. The move also signals a broader willingness within the SSF to pursue reforms that align benefits with living costs while ensuring that the fund’s governance, administration, and long-term sustainability remain intact. The board’s decision to request a revision shows a structured process: identify shortcomings, adjust the model, and re-submit for evaluation rather than abandoning the reform initiative altogether.

The chair’s remarks, as reported by board members, indicated a preference for a more streamlined and intelligible approach to pension calculation—one that can be consistently applied across varying economic scenarios. The rejection did not indicate a denial of the objective—ensuring that pension outcomes better mirror inflation—but rather a refusal to endorse a blueprint that was deemed too diffuse or technically burdensome to deploy with confidence. In this sense, the board’s action can be viewed as a governance mechanism aimed at aligning ambitious policy aims with practical implementation constraints, thereby protecting the integrity of the SSF’s administration while preserving the potential for meaningful reform in future iterations.

Impact on Section 39 Insured and Systemic Implications

The implications of delaying the new pension formula extend beyond theoretical considerations; they directly affect more than 300,000 insured individuals under Section 39. These are people who were once employed and who have continued to contribute to the SSF by making individual insurance payments. The revised policy pathway implies that the benefits for this group would be recalculated in line with inflation trends, which, in turn, would influence the long-term payout profile and retirement security for these insured workers. The responsive design of the new formula sought to ensure that benefits would not erode in real terms as the cost of living rises, thereby protecting retirees from the erosion of purchasing power in a changing economic landscape.

From a financial planning perspective, the proposal’s approach to inflating pensions would tie future payouts to macroeconomic indicators. This would imply a shift away from static benefit formulas toward a dynamic indexing mechanism, which could adjust not only the level of benefits but potentially the timing and the distribution of payments as well. Such a shift could introduce more complexity into long-range budgeting and forecasting for the SSF, necessitating enhancements in data collection, actuarial modelling, and administrative systems. It would also require careful calibration to ensure equity across all sections of the fund’s membership, including those under different sections and service histories, so that the reformed formula does not inadvertently advantage or disadvantage particular cohorts.

The SSF’s leadership and research teams have argued that the proposed approach would eventually be neutral in terms of long-run sustainability. In estimates shared by supporters, they projected that over a ten-year horizon, the adjusted pension costs for the 300,000 insured members would accumulate to roughly 60 billion baht, against a fund balance of about 2.6 trillion baht. This assessment frames the revision not as a threat to the fund’s viability, but as a measured cost that the fund could accommodate while maintaining robust reserves. The key idea is that even though the near-term outlays might rise to fund higher or inflation-indexed pensions for a subset of the population, the total effect would be offset by the fund’s large asset base, provided that investment returns and contribution inflows remain stable and the inflation-indexing parameters are judiciously managed.

In practical terms, this means that the revised formula would still be designed with long-term sustainability in mind. The research team’s conclusion—that the increased spending on the Section 39 group would not endanger the fund’s overall financial health—relies on disciplined governance, regular actuarial reviews, and prudent management of the fund’s assets. It is important to stress that the numbers cited reflect projections based on specific models and scenarios; actual outcomes would depend on rate of return on investments, demographic shifts, changes in contribution patterns, administrative costs, and the precise rules adopted for indexing. The board’s insistence on revising the formula while considering these variables indicates a careful balancing act: deliver meaningful improvements to benefit adequacy and security for retirees, while safeguarding the fiscal integrity of the SSF and ensuring that all stakeholders can have confidence in the fund’s long-term capacity to meet its commitments.

Beyond purely financial considerations, the analysis also touched on the distributional effects of the proposed changes. The SSF’s governance framework emphasizes equitable treatment of all workers and retirees, including both employers and employees under Section 33, as well as those under different sections who may have different contribution histories. The proponents of the reform asserted that there would be additional contributions from both employers and employees in the context of the new formula, reducing the risk that any one group would bear a disproportionate burden. In other words, the revised approach would involve a restructured contribution mix that supports the enhanced pension framework without compromising the rights and expectations of any stakeholder cohort. This claim aligns with a broader objective of pension reform: to preserve fairness and avoid distortions in incentives that could arise from a reform that shifts financial burdens in ways that create unintended consequences for different segments of the workforce.

The debate over the Section 39 implications and the longer-term sustainability profiles illustrates the inherent complexity of pension design. On one hand, indexing pensions to inflation aligns with the basic principle of protecting retirees from the erosion of purchasing power. On the other hand, the administrative and actuarial complexity of implementing a robust, transparent, and stable indexing system can be substantial. The SSF’s approach in this episode demonstrates an attempt to reconcile these competing demands by demanding a revision that improves clarity and feasibility while preserving the core goal of inflation-adjusted benefits. The outcome leaves the door open for a refined proposal that could be more easily understood by members, employers, and the general public, while still delivering the intended safeguards for retirement income.

The meeting’s resolution to request a revised formula also signals a readiness to maintain open channels for stakeholder input and oversight. This is consistent with the SSF’s role as a large public fund; it bears responsibility not only for administering pension benefits but also for maintaining trust and legitimacy with millions of subscribers. The insistence on revision and re-presentation indicates an adherence to governance norms that emphasize accountability, transparency, and evidence-based policy design. It also reflects a recognition that the success of pension reform depends on clear communication of the rules, the rationale behind them, and the anticipated effects on different groups within the society.

Governance, Process, and Policy Development

The policy development process surrounding the SSF’s pension formula is as important as the formula itself. A key aspect highlighted by the discussion is the sequence of approvals and the role of sub-committees in providing initial validation before broader board consideration. The sub-committee’s prior pre-approval of the calculation method in October, followed by submission to the SSF board, illustrates a structured governance pathway designed to vet technical aspects before they are placed for high-level decision-making. This process helps ensure that only well-justified and thoroughly assessed proposals reach the full board, thereby reducing the risk of adopting policies with unverified assumptions or opaque mechanics.

The sequence also reveals the importance of internal consultation and cross-functional review. The involvement of researchers, actuaries, and policy advocates helps ensure that the proposed formula is scrutinized from multiple angles—financial, legal, administrative, and social. The collaborative approach is crucial for addressing concerns about complexity and practicality while striving to preserve the policy intent of protecting retirees’ purchasing power. The December-to-March timeline for revisiting the proposal demonstrates a disciplined revision cycle: identify concerns, restructure the proposal to address them, and re-present for decision. This cadence can be considered best practice for major pension reforms, where stakeholder buy-in and administrative readiness are essential for successful implementation.

Another governance consideration is the balance between speed and deliberation. In public sector pension reform, there can be pressure to deliver timely improvements to member benefits, but rushing the process can produce fragmented outcomes or unintended consequences. The SSF’s current approach prioritizes a careful, measured path that pauses to ensure simplicity and clarity in the formula’s application. This may come at the cost of a shorter-term win, but it improves the likelihood of durable reform with broad acceptance. The board’s stance to request revision and representation aligns with this philosophy and suggests a governance posture that values durable reform over hasty, contested changes.

The issue of cross-examination, raised by a board member, also sheds light on procedural dynamics within the SSF. While intense scrutiny can slow the pace of reform, it can also enhance the quality of the final product by ensuring that concerns are addressed upfront. The board’s operational culture appears to support rigorous examination of technical proposals, a factor that often correlates with higher policy legitimacy and stakeholder trust. The call for greater public monitoring and transparency further reinforces this culture. It demonstrates a commitment not only to internal governance standards but also to broad-based accountability, inviting civil society and the general public to engage with the process in meaningful ways.

From a policy development standpoint, the guiding objective remains clear: to deliver a pension framework that remains financially sustainable while offering improved security and fairness for retirees. The SSF’s initiative to anchor pension benefits to inflation signals a forward-looking approach to risk management, acknowledging that economic conditions will evolve and that retirees need protection against the erosion of real value of benefits. The revised approach will need to articulate precisely how inflation indexing would be calculated, which baskets of prices or indices would be used, how frequently revisions would occur, and how the changes would be communicated to employers and employees. Clarity on these operational details is essential to making the policy credible and actionable, and will likely be a central focus of the March re-submission.

Public Accountability, Transparency, and Monitoring

Public accountability and transparency are rising themes in pension governance, especially for a fund as large as the SSF. The board’s openness to public monitoring reinforces the principle that pension reforms should be conducted in a manner consistent with democratic governance and fiscal stewardship. The invitation to the public to track the reform process reflects a commitment to maintain an open dialogue with stakeholders who are directly affected by any changes to benefits and contributions. This approach aligns with contemporary governance norms that emphasize inclusivity, accessible information, and evidence-based policymaking. By encouraging scrutiny, the SSF signals its readiness to be held to high standards of accountability and to respond to legitimate concerns with data-driven explanations.

The rejection of the original formula, paired with a promise to revise and re-present, strengthens the accountability narrative. It demonstrates that the SSF is not pursuing reform for its own sake, but rather in response to identified deficiencies and in consideration of stakeholder impact. A crucial element of successful governance in this context is the ability to communicate complex actuarial concepts in accessible language. If the revised proposal can distill the essential mechanics of inflation-based indexing into straightforward rules and examples, it will help ensure that employers, employees, and the public understand how benefits would change under different economic scenarios. Transparent communication about assumptions, sensitivities, and outcomes helps to sustain trust and reduces the risk of misinterpretation or misinformation.

In parallel with public monitoring, the SSF’s governance framework should incorporate ongoing oversight mechanisms. This includes regular actuarial reviews, independent audits, and transparent reporting on fund health, contribution inflows, investment performance, and administrative costs. Such oversight would monitor the interplay between the fund’s asset base and the projected liabilities under the revised formula, flagging any divergences early and enabling timely corrective actions. It would also ensure that the proposed inflation indexing remains aligned with the fund’s long-term durability, safeguarding the interests of current workers, future retirees, and the broader economy.

The SSF stands as the country’s largest public fund, with a current valuation exceeding 2.65 trillion baht. This scale underlines the magnitude of accountability and the responsibilities carried by the board and the management team. The fund serves a substantial base of subscribers—1) the 24 million individuals who rely on SSF protections for welfare and financial security—and the governance choices taken by the board have wide-reaching implications for living standards and economic stability across the nation. Maintaining a steady line of communication with this broad constituency is essential to sustaining confidence in the SSF’s ability to manage resources prudently and implement reforms that are prudent, well-justified, and socially legitimate.

The Fund’s Scale, Reach, and Implications for Stakeholders

The Social Security Fund’s expansive size and scope define both the challenge and opportunity inherent in pension reform. The fund’s value—currently reported at over 2.65 trillion baht—places it among the country’s most significant financial institutions, with far-reaching implications for macroeconomic stability, public welfare, and social security. The fund’s subscriber base, totaling around 24 million people, represents a substantial portion of the population depending on SSF programs for retirement support and related welfare benefits. The sheer scale of this program magnifies the importance of policy clarity, operational efficiency, and sound actuarial practices.

From a stakeholder perspective, reforms to the SSF pension formula would affect multiple groups beyond those directly covered by Section 39. Employers and employees under Section 33, as well as other contributors to the fund, would be impacted by changes in contribution requirements, benefit calculations, and the long-run risk profile of the fund. The assertion that the revised formula would involve additional contributions from both sides aims to distribute financial responsibility more equitably across the spectrum of contributors. If the revised approach can achieve a smooth balance between increased benefits for retirees and sustainable funding mechanisms, it will help preserve the incentive compatibility of the system—encouraging ongoing contributions while ensuring that retirement security remains credible and robust.

Transparency about costs and benefits is essential for all stakeholders. The projected numbers—such as the 60-billion-baht cost estimate over ten years for the Section 39 group—provide a frame of reference that helps policymakers, employers, employees, and the general public gauge the magnitude of reform. Yet, projections inherently depend on multiple assumptions, including future inflation trajectories, wage growth, submission patterns, and investment performance. Communicating these assumptions clearly, and updating them as new data emerge, will be critical to maintaining trust and ensuring that the reform remains credible as conditions evolve. A structured risk assessment should accompany any revised proposal, outlining worst-case, base-case, and best-case scenarios and identifying strategies to mitigate downside risks, such as setting conservative indexing caps or implementing phased rollouts to monitor real-world effects before full-scale adoption.

Operational readiness is another essential facet of implementing any revised pension formula. If the March presentation succeeds, the SSF would move toward formal adoption or further consultations, potentially requiring legislative or regulatory adjustments to formalize a new indexing mechanism. Such steps would necessitate meticulous project management, including impact assessments, IT system upgrades, staff training, and stakeholder outreach programs. The aim would be to ensure that the organization’s internal processes align with the mechanics of the new formula, enabling accurate calculation of benefits, timely communication of changes to beneficiaries, and consistent application across all affected groups. Achieving this alignment requires cross-departmental collaboration within the SSF, as well as coordination with external partners such as pension administrators, employers’ associations, and sectoral representatives who would play a role in communicating and implementing the changes at the workplace level.

From a broader policy perspective, the ongoing dialogue about inflation-indexed pensions reflects a global trend toward more adaptive and responsive retirement systems. Many pension schemes around the world are grappling with the challenge of aging populations, rising living costs, and volatile macroeconomic conditions. Lessons from comparative experiences suggest that successful reforms typically rest on transparent design, credible data, accessible explanations, and staged implementation that allows for performance monitoring and iterative improvement. The SSF’s current engagement with the public and its commitment to revising the proposal demonstrate a constructive approach in line with these international best practices. The emphasis on simplicity and clarity will be particularly important for ensuring that both current and future contributors understand their rights and obligations, as well as the benefits they can reasonably expect in retirement under the revised framework.

In sum, the SSF’s decision to pause and revise the formula demonstrates a mature governance posture that prioritizes effectiveness, transparency, and long-term reliability over expedient but potentially unstable reforms. It acknowledges the complexities of inflation-based benefit indexing and the necessity of balancing theoretical benefits with practical administration. By maintaining a focus on sustainability while addressing the needs of retirees, the SSF aims to uphold its mandate to provide welfare and financial security for millions of subscribers. The March meeting will be a crucial juncture, offering an opportunity to present a more robust and comprehensible methodology that could gain the broad support necessary for durable reform.

Conclusion

The SSF Board’s rejection of the proposed pension formula as too complicated marks a significant moment in pension governance and reform. Assoc Prof Sustarum Thammaboosadee’s acknowledgment of the setback, paired with a commitment to refine and re-present the proposal in March, signals a pragmatic approach to policy development—one that values clarity, feasibility, and financial sustainability alongside a commitment to improving retirees’ welfare. The reform would have affected more than 300,000 Section 39 insured individuals who continued their SSF contributions independently, with inflation-adjusted pension calculations intended to reflect cost-of-living changes. While the new approach would have required more substantial spending in the near term, proponents argued that it would not compromise the fund’s long-term sustainability. They estimated a ten-year cost in the vicinity of 60 billion baht for the Section 39 group, against a substantial fund balance of about 2.6 trillion baht, illustrating that the fund could accommodate the adjustment under prudent management.

At the heart of the discussion lies a careful balancing act: delivering a pension framework that protects retirees’ purchasing power while maintaining the SSF’s financial health, administrative practicality, and governance integrity. The board’s decision to require a revision demonstrates a steadfast commitment to ensuring that reforms are not only well-intentioned but also implementable and transparent. The sub-committee’s prior approvals, the ongoing actuarial analyses, and the emphasis on additional contributions from both employers and employees under Section 33 reflect a nuanced approach to policy design that seeks to preserve fairness across stakeholder groups. The call for public monitoring and the emphasis on transparent scrutiny further reinforce the SSF’s dedication to accountability and trust-building, essential elements for sustaining confidence in the fund’s ability to protect workers and retirees over the long term.

As the SSF prepares for the March review, the attention will turn to how the revised formula can maintain its core objectives—protecting retirees from inflation, ensuring equitable treatment of contributors, and preserving the fund’s sustainability given its substantial size and broad reach. The SSF’s leadership will need to articulate the revised methodology clearly, provide robust actuarial backing, and demonstrate how the operational framework will support consistent, accurate, and fair application across all sections of membership. The balance between simplicity for implementation and sophistication for accuracy will be the defining feature of the next phase. If the March presentation succeeds, it could mark a watershed moment in the SSF’s reform journey, delivering a more sound, transparent, and resilient pension framework that better aligns benefits with real-world economic conditions while safeguarding the fund’s enduring capacity to deliver welfare and financial security to its millions of subscribers.