From July 1, 2024: Will the pension increase by 15% or at least 50% compared to the salary increase for officials after the salary reform in Vietnam?
From July 1, 2024: Will the pension increase by 15% or at least 50% compared to the salary increase for officials after the salary reform in Vietnam?
Pursuant to Resolution 104/2023/QH15, comprehensive salary policy reform will be implemented according to Resolution 27-NQ/TW 2018 from July 1, 2024.
(1) Information on the minimum 15% pension increase:
Speaking at a New Year meeting on the first working day after the Tet holiday, held on February 15, the Minister of Labor, Invalids and Social Affairs stated that in 2024, comprehensive salary policy reform will be implemented according to Resolution 27-NQ/TW 2018. Salary reform must be accompanied by adjustments to pension policies in the spirit of "not allowing retirees to face more difficulties and disadvantages during the reform."
When salary reform raises the general salary level for employees nationwide, but pension is not properly adjusted, pension recipients will be at a disadvantage.
Therefore, it is necessary to calculate and balance appropriately. If the salary for officials and public employees increases by 23.5%, the pension must increase by at least 15%.
However, the Ministry of Finance recently sent a letter to the Ministry of Labor, Invalids and Social Affairs regarding the assessment of the impact of the new salary policy from July 1, 2024, on the implementation of social insurance policies.
The Ministry of Finance stated that, based on preliminary estimates, the budgetary funding needs for the state budget in 2024 will increase compared to the budget expenditure plan for 2024 that has been authorized to implement the proposed plan by the Ministry of Labor, Invalids and Social Affairs, which includes a 15% increase in pensions and social insurance benefits; a 29.2% increase in benefits for those with significant contributions (from 2,055,000 VND to 2,655,000 VND); and a 38.9% increase in social benefits (from 360,000 VND to 500,000 VND).
With the above-mentioned increases, the total expenditure will be 17,276 trillion VND, exceeding the balancing capability of the budget expenditure plan for 2024 that the National Assembly has decided to a maximum of 7,430 trillion VND.
Therefore, the Ministry of Finance proposes that the Ministry of Labor, Invalids and Social Affairs coordinate with relevant agencies to review and determine specific adjustment levels in order to submit to the competent authority for decision-making on the above-mentioned increases based on the balancing capability of the state budget.
(2) Information on at least a 50% increase compared to the salary increase for officials:
During the 31st session, the Standing Committee of the National Assembly provided opinions on the explanation, reception, and revision of the draft Law on Social Insurance (amended).
Regarding the pension increase, the Minister of Labor, Invalids and Social Affairs reported that, after considering the opinions of the Central Steering Committee for Salary Reform, the ministry has developed a plan to adjust pensions, dividing them into three groups:
The first group consists of regular retirees. For this group, the pension increase will be calculated reasonably between the working area and the retirees, ensuring harmony between those in the same position before and after July 1, 2024...
"Our perspective is that the pension adjustment should not be less than 50% compared to the salary increase after the reform to ensure harmony and balance, and to prevent retirees from being pushed further and suffering more disadvantages during the salary reform," emphasized the Minister.
The second group includes retirees before July 1, 2024. The state needs to apply compensation to reduce the wage gap between retirees before and after the salary policy reform.
In addition to implementing social insurance policies, those who receive salaries from the budget when retiring are guaranteed full benefits like regular retirees.
Regarding the third group, retirees before 1995, the Minister stated that special policies will be implemented to further increase their pensions.
Therefore, the adjustment of pension amounts should not be less than 50% compared to the salary increase for officials after the salary reform to ensure harmony and balance, and to prevent retirees from being pushed further and suffering more disadvantages during the salary reform.
Thus, the mentioned pension increase levels are expected increases. The specific details on the percentage increase in pensions after the salary reform from July 1, 2024, will depend on the official document on the detailed regulations for pension adjustment after the reform. However, the pension amounts after the salary reform will be adjusted appropriately to ensure no retirees are disadvantaged.
Source: Government Electronic Portal
From July 1, 2024: Will the pension increase by 15% or at least 50% compared to the salary increase for officials after the salary reform in Vietnam? (Image from the Internet)
Vietnam: How to calculate pensions from July 1, 2024 when the statutory pay rate is annulled?
Pursuant to Resolution 27-NQ/TW 2018, which refers to the statutory pay rate in salary reform, the specific calculation of pensions will be as follows:
Reform content:
3.1. For officials, public employees, and armed forces (public sector)
...
c) Determine specific factors to design new payrolls
- Annul the statutory pay rate and current salary coefficients, and establish a base pay amount in the new payrolls.
From the above provisions, it can be seen that the salary reform policy will remove the statutory pay rate from July 1, 2024.
So, how will the calculation of pensions be affected?
Pursuant to Article 7 of Decree 115/2015/ND-CP, for compulsory social insurance participants, the calculation of pensions in 2024 is based on the monthly pension benefit rate and the average monthly social insurance premium.
Specifically, the calculation of pensions is as follows:
Monthly pension amount | = | monthly pension rate | x | the average monthly salary as the basis for social insurance payment |
Therefore, according to the above formula, the statutory pay rate is not directly adjusted in the calculation of the monthly pension. Therefore, it is expected that when the statutory pay rate is abolished from July 1, 2024, the above-mentioned pension calculation method may not change until new regulations are issued.
For those whose pensions are adjusted from July 1, 2024, the monthly pension calculation formula can be as follows:
Adjusted monthly pension amount | = | Previous pension amount | + | (Adjustment rate x Previous pension amount) |
However, regarding the minimum pension amount according to the regulations in the Law on Social Insurance 2014, it is equal to the statutory pay rate. Therefore, when the statutory pay rate is annulled, new guidance is needed regarding the regulation on the minimum pension amount
When is the time for pension enjoyment in Vietnam?
Pursuant to the provisions of Article 59 of the Law on Social Insurance 2014, the time for pension enjoyment is as follows:
- For employees who are paying compulsory social insurance premiums as defined at Points a, b, c, d, dd, e and i, Clause 1, Article 2 of the Law on Social Insurance 2014, the time for pension enjoyment is the time stated in work cessation decisions issued by employers when the employees have fully satisfied the law-prescribed conditions for pension enjoyment.
- For employees who are paying compulsory social insurance premiums as defined at Point h, Clause 1, Article 2 of the Law on Social Insurance 2014, the time for pension enjoyment is the month following the month when they have fully satisfied the conditions for pension enjoyment and submitted written requests to social insurance agencies.
- For employees defined at Point g, Clause 1, Article 2 of the Law on Social Insurance 2014 and persons who have their period of social insurance premium payment reserved, the time for pension enjoyment is the time stated in the written requests of the employees who have fully satisfied the prescribed conditions for pension enjoyment.
- The Minister of Labor, Invalids and Social Affairs shall stipulate in detail the time for pension enjoyment for employees defined in Clause 1, Article 2 of the Law on Social Insurance 2014.
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