How long must one contribute to insurance to receive a pension in Vietnam? Is Personal Income Tax applicable to the pension in Vietnam?

How long must one contribute to insurance to receive a pension in Vietnam?

The contribution period to Social Insurance (SI) for pension entitlement differs between participants of compulsory SI and voluntary SI. Therefore, understanding the regulations regarding SI participants will help workers grasp their rights and responsibilities, ensuring compliance with SI contributions.

According to Article 2 of the Law on Social Insurance 2014, the participants of SI include:

(1) For Participants in Compulsory Social Insurance:

According to the provisions of Article 54 of the Law on Social Insurance 2014 (amended by point a clause 1 Article 219 of the Labor Code 2019), it is stipulated that in order to receive a pension, the worker must meet the retirement age requirement and have contributed to social insurance for a certain number of years.

- The retirement age (calculated until 2025) according to Decree 115/2015/ND-CP and the retirement age increase schedule in Article 169 of the Labor Code 2019 is as follows:

+ Male: 62 years old (by 2025, retirement age for males increases gradually from 60 years old in 2019, increasing by 3 months each year, reaching 62 years by 2028; by 2025, about 61 years and 9 months).

+ Female: 60 years old (increasing gradually from 55 years old in 2019, increasing by 4 months each year, reaching 60 years by 2035; by 2025, about 58 years and 4 months).

Note: Some special cases (heavy labor, hazardous work, or reduced labor capacity) can retire earlier (up to 5 years less).

- The number of years contributing to social insurance to receive a pension is as follows:

+ The minimum number of contributory years to social insurance is at least 20 years for both males and females.

+ For female workers who are commune-level officials or non-specialized personnel at the commune, ward, or town level, if they have contributed to social insurance for 15 to less than 20 years and meet the retirement age requirement as mentioned, they are entitled to a pension.

(2) For Participants in Voluntary Social Insurance:

According to the provisions of Article 73 Law on Social Insurance 2014 (amended by point c clause 1 Article 219 Labor Code 2019), a worker participating in voluntary social insurance is eligible for a pension when they fulfill the following conditions:

- Meet the retirement age stipulated in clause 2 Article 169 of the Labor Code 2019 as follows:

+ Male: 62 years old (by 2025, retirement age for males increases gradually from 60 years old in 2019, each year increasing by 3 months, reaching 62 years by 2028; by 2025, about 61 years and 9 months).

+ Female: 60 years old (increasing gradually from 55 years old in 2019, each year increasing by 4 months, reaching 60 years by 2035; by 2025, about 58 years and 4 months).

Note: Some special cases (heavy labor, hazardous work, or reduced labor capacity) can retire earlier (up to 5 years less).

- At least 20 years contributing to social insurance.

(3) Illustrative Examples:

- Case 1: Mr. A was born in 1963, by 2025 he will be 62 years old (retirement age fulfilled). He started contributing to SI in 2005, and by 2025 he would have contributed for 20 years (2005-2025). He is eligible to receive a pension immediately from 2025.

- Case 2: Ms. B was born in 1967, by 2025 she will be 58 years and 4 months old (retirement age for females fulfilled). She began contributing to SI in 2010, reaching only 15 years by 2025. She may:

+ Voluntarily contribute an additional 5 years (60 months) to fulfill 20 years and thereafter receive a pension.

+ Or choose a one-time withdrawal from SI if she does not wish to continue her contributions.

How long must one contribute to insurance to receive a pension in Vietnam? (Image from the Internet)

Is Personal Income Tax applicable to the pension in Vietnam?

Based on clause 10 Article 4 of the Law on Personal Income Tax 2007 (supplemented by clause 3 Article 2 of the Law on Amendments to Tax Laws 2014; amended by clause 2 Article 1 of the Law on Amendments to the Law on Personal Income Tax 2012), the incomes exempt from personal income tax are defined as follows:

Incomes exempt from tax

...

9. The part of night work wages, overtime wages paid higher than wages for working during the day, working regular hours as prescribed by law.

10. Pensions paid by the Social Insurance Fund; pensions paid by the voluntary pension fund monthly.

11. Income from scholarships, including:

a) Scholarships received from the state budget;

b) Scholarships received from organizations within and outside the country under that organization's scholarship support program.

...

Thus, according to the above provisions, pensions fall under the category of tax-exempt income, and individuals are not required to pay personal income tax on the pensions they receive.

Which incomes from wages and salaries of retirees are subject to personal income tax in Vietnam?

According to the regulation in clause 2 Article 3 of the Law on Personal Income Tax 2007, amended by clause 1 Article 1 of the Law on Amendments to the Law on Personal Income Tax 2012, concerning income from wages and salaries of retirees subject to personal income tax:

(1) Salaries, wages, and other payments of a salary or wage nature;

(2) Allowances and benefits, except the following:

- Allowances, benefits as prescribed by law regarding preferential treatment for people with meritorious services;

- National defense and security allowances;

- Hazardous or dangerous allowances for sectors, trades, or work conducted in hazardous or dangerous environments;

- Attraction allowances, regional allowances as prescribed by law;

- Sudden difficulty allowances, occupational accident or disease benefits, one-time allowance for childbirth or adoption, compensation for reduced labor capacity, one-time retirement allowance, monthly survivor benefits, and other allowances as specified by social insurance legislation;

- Severance allowances, job loss benefits according to the Labor Code;

- Social protection benefits and other benefits and allowances that are non-salary or non-wage nature according to the Government of Vietnam regulations.