What policies do officials retiring before the prescribed age receive in case of downsizing in Vietnam?
What policies do officials retiring before the prescribed age receive in case of downsizing in Vietnam?
Pursuant to Article 7 of Decree 178/2024/ND-CP, the policies for officials retiring before the prescribed age in case of downsizing are as follows:
[1] Entitlement to a one-time retirement subsidy for early retirement:
- For individuals retiring within the first 12 months from the date of the restructuring decision by the competent authority:
+ In cases where the age is from 5 years or less until the prescribed retirement age as stipulated in Appendix I and Appendix II attached to Decree 135/2020/ND-CP, they will receive a subsidy equivalent to one month's current salary multiplied by the number of months of early retirement compared to the retirement date.
+ In cases where the age is over 5 years until reaching 10 years to the prescribed retirement age as specified in Appendix I attached to Decree 135/2020/ND-CP, they will receive a subsidy equal to 0.9 months of their current salary multiplied by 60 months.
- For individuals retiring from the 13th month onward from the date of the restructuring decision by the competent authority, they will receive 0.5 times the subsidy as detailed in point a, clause 1, Article 7 of Decree 178/2024/ND-CP.
[2] Entitlement to pre-retirement age policy based on service duration with mandatory social insurance contributions and years of early retirement as follows:
- In cases where the age is from 2 to 5 years to the prescribed retirement age as provided in Appendix I attached to Decree 135/2020/ND-CP and sufficient duration of service with mandatory social insurance contributions for receiving pension benefits according to legal provisions on social insurance, besides enjoying pension as per legal provisions on social insurance, they are also entitled to the following policies:
+ Not subject to pension reduction for retiring before the prescribed age;
+ Receiving a subsidy equivalent to 5 months of current salary for each year of early retirement compared to the retirement age specified in Appendix I attached to Decree 135/2020/ND-CP;
+ Receiving a subsidy equivalent to 5 months of current salary for the first 20 years of service with mandatory social insurance contributions. From the 21st year onward, for each year of service with mandatory social insurance contributions, a subsidy equal to 0.5 months of current salary will be provided.
- In cases where age exceeds 5 years and up to 10 years to the retirement age prescribed in Appendix I attached to Decree 135/2020/ND-CP, with sufficient duration for mandatory social insurance contributions to receive pension benefits, beyond enjoying pensions, they are entitled to these policies:
+ Exemption from pension reduction for early retirement;
+ Receiving a subsidy equivalent to 4 months of current salary for each year of early retirement compared to the retirement age specified in Appendix I of Decree 135/2020/ND-CP;
+ Receiving a subsidy equivalent to 5 months of current salary for the first 20 years of service with mandatory social insurance contributions. From the 21st year onward, for each year of service with mandatory social insurance contributions, a subsidy equal to 0.5 months of current salary will be provided.
- In circumstances where the age is from 2 to 5 years to the retirement age as set in Appendix II attached to Decree 135/2020/ND-CP, with sufficient service duration and mandatory social insurance contributions, including at least 15 years in heavyweight, hazardous jobs as specified by the Ministry of Labor - Invalids and Social Affairs, or working in areas with especially difficult economic-social conditions before January 1, 2021, they are also entitled to:
+ Not having their pension reduced for early retirement;
+ Receiving a subsidy equivalent to 5 months of current salary for each early retirement year compared to the age stipulated in Appendix II of Decree 135/2020/ND-CP;
+ Receiving a subsidy equivalent to 5 months of current salary for the first 20 years of service with mandatory social insurance contributions. From the 21st year onward, for each year of service with mandatory social insurance contributions, a subsidy equal to 0.5 months of current salary will be provided.
- In cases where the remaining time to retirement is less than two years as prescribed in Appendix I attached to Decree 135/2020/ND-CP with sufficient service for mandatory social insurance contributions, are eligible for pension according to the legal provisions on social insurance without reduction for early retirement.
- Where the age is below two years to the retirement age as set in Appendix II attached to Decree 135/2020/ND-CP, including at least 15 years in hazardous professions as listed by the Ministry of Labor - Invalids and Social Affairs, pension follows standard legal provisions without early retirement reduction.
[3] Officials and public employees retiring early as per clauses 1 and 2, Article 7 of Decree 178/2024/ND-CP are eligible for commendation based on contributions, according to the Law on Emulation and Commendation, and Decree 98/2023/ND-CP. Those lacking tenure for commendation consideration will have their early retirement period counted accordingly to fill tenure shortfall or reappointment for commendation. Officials not eligible for contribution commendation are subject to discretionary commendation by competent authorities.
What policies do officials retiring before the prescribed age receive in case of downsizing in Vietnam? (Image from Internet)
Is personal income tax applied to pension in case of downsizing in Vietnam?
Pursuant to point b.6, clause 2, Article 2 of Circular 111/2013/TT-BTC, stipulations are as follows:
Taxable income items
Under Article 3 of the Personal Income Tax Law and Article 3 of Decree 65/2013/ND-CP, taxable personal income includes:
...
- Income from wages, salaries
Income from wages, salaries is the income that employees receive from employers, including:
...
b) Allowances, subsidies, excluding the following allowances, subsidies:
...
b.6) Emergency hardship allowance, occupational accident subsidy, one-time maternity subsidy or child adoption, maternity leave policies, health recovery post-maternity policies, labor capacity reduction subsidy, one-time retirement subsidy, monthly survivor benefit, severance subsidy, job loss subsidy, unemployment subsidy, and other subsidies as per the Labor Code and Social Insurance Law.
...
Accordingly, under this regulation, pension are not counted as taxable personal income, therefore pension in all cases, including in case of downsizing, are exempt from personal income tax.
Vietnam: Who is responsible for paying personal income tax under current regulations?
Pursuant to Article 2 of Personal Income Tax Law 2007, personal income tax payers include resident individuals with taxable income as stipulated in Article 3 of the Personal Income Tax Law 2007, both within and outside the Vietnamese territory, and non-resident individuals with taxable income under Article 3 of the Personal Income Tax Law 2007 arising within Vietnam.
- A resident individual is one who meets one of the following criteria:
+ Present in Vietnam for 183 days or more in a calendar year or for 12 consecutive months from the first day of presence in Vietnam;
+ Having a permanent residence in Vietnam, including a registered domicile or a leased house for residence in Vietnam with a term-defined contract.
- A non-resident individual is one who does not meet the conditions specified in clause 2, Article 2 of Personal Income Tax Law 2007.
