3 Groups of Beneficiaries to Receive a Pension Increase from July 01, 2024, under the 2024 Wage Reform: Which are the 3 Groups?
Three Groups of Subjects to Receive Increased Pensions from July 1, 2024, under 2024 Wage Reform: Which Three Groups?
At the 31st session on the afternoon of March 15, the Standing Committee of the National Assembly provided feedback on the explanation, acquisition, and revision of the draft Law on Social Insurance (amended).
Speaking at the session, the Minister of Labor, War Invalids and Social Affairs stated that the sector is currently tasked with researching and addressing four issues accompanying the wage policy reform.
Firstly, regarding wage reform in the state sector, the Minister of Labor, War Invalids and Social Affairs emphasized the principle of thoroughly implementing five content items, starting from January 1, 2025.
For the policy on persons with meritorious services, the Minister of Labor, War Invalids and Social Affairs mentioned that the principle stated in the Ordinance on Persons with Meritorious Services is that "persons with meritorious services shall receive higher allowances than usual."
"In that spirit, the level of allowance for persons with meritorious services will be one rank higher than the wage reform level," the Minister of Labor, War Invalids and Social Affairs stated.
For the group of subjects receiving social protection, the head of the Labor, War Invalids and Social Affairs sector envisages amending and supplementing several articles of Decree 20/2021/ND-CP of the Government of Vietnam, which stipulates social assistance policies for social protection subjects towards an increase corresponding with the average wage increase of officials, with a timeline including two milestones of July 1, 2024, and July 1, 2025.
Regarding the current issue of pension increases, the Minister of Labor, War Invalids and Social Affairs reported that after collecting opinions from the Central Steering Committee for Wage Reform, the Ministry has developed plans to adjust pensions, divided into three groups of subjects:
The first group consists of regular retirees. For this group, the pension increase will be reasonably calculated between working sectors and retirees, ensuring harmony between those holding the same position before and after July 1, 2024...
"Our principle is that the pension adjustment should not be lower than 50% of the post-reform wage increase to ensure balance and harmony, preventing retirees from being disadvantaged due to wage reform," the Minister emphasized.
The second group includes those who retired before July 1, 2024. The state needs to apply compensation to reduce the wage gap between those who retired before and after the wage policy reform.
In addition to applying social insurance policies, those receiving wages from the budget upon retirement shall enjoy full policies similar to regular retirees.
Thirdly, for those who retired before 1995, the Minister mentioned that there will be special policies to raise their pensions even further.
"For this group, we will propose to the Politburo and competent authorities to apply special policies," Minister Dao Ngoc Dung stated.
It is expected that from July 1, 2024, upon implementing wage reform, pensions for the aforementioned three groups will be increased. The pension adjustment will not be lower than 50% of the post-reform wage increase to ensure balance and harmony, preventing retirees from being disadvantaged due to wage reform.
Source: Portal of the Government of Vietnam
Three Groups of Subjects to Receive Increased Pensions from July 1, 2024, under 2024 Wage Reform: Which Three Groups?
How to Calculate Pensions from July 1, 2024, When Abolishing the Statutory Pay Rate?
According to Resolution 27-NQ/TW in 2018 on wage policy reform, it mentions the statutory pay rate as follows:
Reform Content
3.1. For officials and public employees in the public sector
...
c) Define specific factors to design the new salary scale
- Abolish the statutory pay rate and the current salary coefficient system, establishing a basic salary as specific monetary amounts in the new salary scale.
Based on the above provisions, it can be seen that the wage policy reform will abolish the statutory pay rate from July 1, 2024.
How will the pension calculation be affected?
According to the current provisions in Article 7 of Decree 115/2015/ND-CP, for those participating in compulsory social insurance, the pension calculation in 2024 is based on the monthly pension rate and the average monthly salary used for social insurance contributions.
To be specific, the pension calculation is represented by the following formula:
| Monthly Pension | = | Pension Rate (%) | X | Average Monthly Salary Used for Social Insurance Contributions || --- | --- | --- | --- | --- |
Thus, according to the above formula, the statutory pay rate is not directly adjusted in the monthly pension calculation. Therefore, it is anticipated that the abolition of the statutory pay rate from July 1, 2024, may not change the aforementioned pension calculation formula until new regulations are issued.
For those whose pensions are adjusted from July 1, 2024, the monthly pension calculation may be as follows:
| Monthly Pension after Adjustment | = | Pension before Adjustment | + | (Adjustment Rate x Pension before Adjustment) || --- | --- | --- | --- | --- |
However, according to the provisions in the Social Insurance Law 2014, the minimum pension is equivalent to the statutory pay rate. Therefore, when the statutory pay rate is abolished, new guidance will be needed regarding this minimum pension provision.
What is the Current Statutory Retirement Age for Employees under Normal Conditions?
According to Clause 2, Article 169 of the Labor Code 2019, the retirement age is stipulated as follows:
Retirement Age
1. Employees who meet the conditions for social insurance contribution periods as stipulated by social insurance law are entitled to pensions upon reaching retirement age.
2. The retirement age for employees under normal working conditions will be adjusted according to a schedule until it reaches 62 years for men in 2028 and 60 years for women in 2035.
From 2021, the retirement age for employees under normal working conditions is 60 years and 03 months for men and 55 years and 04 months for women; thereafter, it increases by 03 months per year for men and 04 months per year for women.
3. Employees with reduced working capacity; those engaged in particularly arduous, toxic, or dangerous occupations; those working in areas with extremely difficult socio-economic conditions may retire at an earlier age than stipulated in Clause 2 of this Article by up to 05 years, except where otherwise stipulated by law.
4. Employees with high professional and technical qualifications and certain special cases may retire at a later age than stipulated in Clause 2 of this Article by up to 05 years, except where otherwise stipulated by law.
5. the Government of Vietnam provides detailed regulations for this Article.
Based on the above provisions and the schedule for adjusting the retirement age specifically provided in Clause 2, Article 4 of Decree 135/2020/ND-CP, the retirement age for employees under normal conditions in 2024 is:
- Male employees: 61 years- Female employees: 56 years and 4 months.
Employees who meet the conditions for social insurance contribution periods as stipulated by social insurance law are entitled to pensions upon reaching retirement age.
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