From July 01, 2024, will retirees benefit from pension reforms? Will pensions be increased with the implementation of the salary reform?
From July 1, 2024, will retirees receive pension wage reform? Will the pension be increased when implementing wage reform?
According to the provisions of Clause 1, Article 10 of Decree 115/2015/ND-CP, for employees under state-regulated wage policy who started participating in social insurance before January 1, 2016, the salary on which social insurance has been paid as a basis for calculating the average monthly salary for social insurance contribution will be adjusted according to the statutory pay rate at the time of policy implementation.
Therefore, when wage reform in 2024 abolishes the statutory pay rate, determining the salary that has been used as the basis for calculating the average monthly salary for social insurance contribution for these individuals will face inconsistencies with the current regulations.
The Minister of Labor, Invalids, and Social Affairs has also proposed that public sector wage reform should be coupled with enterprise sector wage reform and appropriately adjust the pensions and other social benefits.
Thus, for individuals who retired before implementing the wage reform, it is clear that when implementing the wage reform, the pension policies for retirees may also be adjusted in accordance with the new wage reform regulations.
Additionally, Clause 1, Article 7 of Decree 115/2015/ND-CP specifies the method of calculating pension wages as follows:
| Monthly pension = Monthly benefit rate x Average monthly salary on which social insurance contributions were based || --- |
According to the above regulation, the pension is calculated based on the benefit rate and the average monthly salary on which social insurance contributions were based.
- In the case where new salaries (increased according to wage reform) have been received and retirement occurs after the wage reform, the average monthly salary on which social insurance contributions were based will increase. Thus, if the method of pension calculation remains unchanged and the monthly benefit rate remains the same, the pension of individuals retiring after the wage reform will also increase according to the wage reform from July 1, 2024.
From July 1, 2024, will retirees receive pension wage reform? Will the pension be increased when implementing wage reform?
What is the current pension amount?
Article 2 of Circular 06/2023/TT-BLDTBXH stipulates the adjustment of pensions, social insurance benefits, and monthly allowances as follows:
* From July 1, 2023, the pension, social insurance benefits, and monthly allowances of the subjects specified in Clause 1, Article 1 of Circular 06/2023/TT-BLDTBXH will be adjusted as follows:
- Increase by 12.5% on the pension, social insurance benefits, and monthly allowances of June 2023 for subjects specified in Clause 1, Article 1 of Circular 06/2023/TT-BLDTBXH that have been adjusted according to Decree 108/2021/ND-CP dated December 7, 2021, of the Government of Vietnam adjusting pensions, social insurance benefits, and monthly allowances. To be specific:
| Pension, social insurance benefits, monthly allowances from July 2023 | = | Pension, social insurance benefits, monthly allowances of June 2023 | x | 1.125 || --- | --- | --- | --- | --- |
- Increase by 20.8% on the pension, social insurance benefits, and monthly allowances of June 2023 for subjects specified in Clause 1, Article 1 of this Circular that have not been adjusted according to Decree 108/2021/ND-CP dated December 7, 2021, of the Government of Vietnam adjusting pensions, social insurance benefits, and monthly allowances. To be specific:
| Pension, social insurance benefits, monthly allowances from July 2023 | = | Pension, social insurance benefits, monthly allowances of June 2023 | x | 1.208 || --- | --- | --- | --- | --- |
* From July 1, 2023, the pension, social insurance benefits, and monthly allowances of the subjects specified in Clause 2, Article 1 of Circular 06/2023/TT-BLDTBXH after being adjusted according to Clause 1, Article 2 of Circular 06/2023/TT-BLDTBXH will be further adjusted as follows:
- For individuals whose pensions, social insurance benefits, and monthly allowances are under 2,700,000 VND/month:
| Adjusted pension, social insurance benefits, monthly allowances | = | Pensions, social insurance benefits, monthly allowances after being adjusted according to Clause 1, Article 2 of this Circular | + | 300,000 VND/month || --- | --- | --- | --- | --- |
- For individuals whose pensions, social insurance benefits, and monthly allowances are from 2,700,000 VND/month to under 3,000,000 VND/month:
| Adjusted pension, social insurance benefits, monthly allowances | = | 3,000,000 VND/month || --- | --- | --- |
Example:
* For cases where the subjects specified in Clause 1, Article 1 of Circular 06/2023/TT-BLDTBXH have been adjusted according to Decree 108/2021/ND-CP dated December 7, 2021, of the Government of Vietnam adjusting pensions, social insurance benefits, and monthly allowances, the pension calculation method is as follows:
Ms. A’s pension in June 2023 is 1,500,000 VND. From July 1, 2023, Ms. A will receive an additional 12.5% increase in pension.
Therefore, Ms. A’s pension from July 2023: 1,500,000 x 1.125 = 1,687,500 VND. Since Ms. A's adjusted pension is still under 2,700,000 VND, she will receive an additional 300,000 VND.
Thus, Ms. A’s pension from July 2023 is 1,987,500 VND.
In the case where Ms. A’s adjusted pension as per Clause 1, Article 1 of Circular 06/2023/TT-BLDTBXH is from 2,700,000 VND to under 3,000,000 VND, her pension will be rounded to 3,000,000 VND.
* For cases where the subjects specified in Clause 1, Article 1 of Circular 06/2023/TT-BLDTBXH have not been adjusted according to Decree 108/2021/ND-CP dated December 7, 2021, of the Government of Vietnam adjusting pensions, social insurance benefits, and monthly allowances. The calculation method is as follows:
Mr. B’s pension in June 2023 is 1,800,000 VND.
Mr. B’s pension from July 1, 2023, is: 1,800,000 x 1.208 = 2,174,000 VND.
Thus, Mr. B’s adjusted pension is still under 2,700,000 VND, so he will receive an additional 300,000 VND, making his total pension 2,474,000 VND.
In the case where Mr. B’s adjusted pension as per Clause 1, Article 1 of Circular 06/2023/TT-BLDTBXH is from 2,700,000 VND to under 3,000,000 VND, his pension will be rounded to 3,000,000 VND.
Will the retirement age of workers increase in 2024?
Based on Article 169 of the Labor Code 2019, the retirement age of workers in normal working conditions will be adjusted according to a schedule until reaching 62 years old for male workers in 2028 and 60 years old for female workers in 2035.
From 2021, the retirement age of workers in normal working conditions is 60 years and 3 months for male workers and 55 years and 4 months for female workers; thereafter, it will increase by 3 months per year for male workers and 4 months per year for female workers.
Thus, it can be seen that the schedule for increasing the retirement age for workers in normal conditions will continue until 2028 (when male workers reach 61 years) and 2035 (when female workers reach 60 years).
Therefore, if there are no changes, the retirement age of workers in normal working conditions will continue to increase in 2024.
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