What is the inflation coefficient for social insurance in Vietnam in 2024? How does the 2024 inflation coefficient affect the incomes of employees?

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What is the latest inflation coefficient for social insurance in Vietnam in 2024?

On December 29, 2023, the Ministry of Labor, War Invalids, and Social Affairs issued Circular 20/2023/TT-BLDTBXH on regulations for adjusting salaries and monthly income for social insurance contributions.

In Article 4 of Circular 20/2023/TT-BLDTBXH, it clearly states that Circular 20/2023/TT-BLDTBXH will be effective from February 15, 2024, and the provisions apply from January 01, 2024.

Thus, the following social insurance inflation coefficient for 2024 will be applied from January 01, 2024.

Table 1: Inflation coefficients for social insurance salary contributions

Table 2: Inflation coefficients for monthly income already paid for social insurance contributions

What is the inflation coefficient for social insurance in Vietnam in 2024? How does the 2024 inflation coefficient affect the incomes of employees? (Image from the Internet)

How does the inflation coefficient affect the incomes of employees in Vietnam?

According to Article 10 of Decree 115/2015/ND-CP and Article 63 of the Law on Social Insurance 2014:

The monthly salary/income on which social insurance is based, after adjustment, is used to calculate the average monthly salary/income on which social insurance is based (Mbqtl) for employees:

Mbqtl = Total adjusted monthly salary for social insurance contributions / Total months contributed to social insurance

Thus, the social insurance inflation coefficient will affect the average monthly salary for social insurance contributions of employees.

Therefore, the following social insurance benefits calculated based on the average monthly salary for social insurance contributions will be affected:

(1) Lump-sum social insurance benefits according to the formula:

Lump-sum social insurance benefit = (1.5 x Mbqtl x Contribution period before 2014) + (2 x Mbqtl x Contribution period after 2014)

(2) Monthly pension amount according to the formula:

Pension = Benefit rate x Mbqtl

(3) Lump sum allowance when retiring

If social insurance contributions exceed the number of years calculated at a 75% rate.

The lump sum allowance is calculated based on the number of years the social insurance contributions exceed the corresponding number of years for a 75% pension rate, with each additional year of social insurance contributions counted as 0.5 months of the average monthly salary/income for social insurance contributions.

(4) Lump sum death benefit:

- If the insured pensioner dies:

Benefit = 48 x Pension - 0.5 x (Number of months the pension was received - 2) x Pension

- If the employee still contributing to social insurance or preserving the time of social insurance contribution dies:

Benefit = 1.5 x Mbqtl x Years of social insurance contributions before 2014 + 2 x Mbqtl x Years of social insurance contributions from 2014 onwards.

What is the formula to calculate the adjusted monthly salary and income for social insurance contributions in Vietnam in 2024?

Based on Article 2 and Article 3 of Circular 20/2023/TT-BLDTBXH, the formula to calculate the adjusted monthly salary and income for social insurance contributions in 2024 is as follows:

(1) Adjusted monthly salary for social insurance contributions in 2024

Adjusted monthly salary for social insurance contributions each year = Total monthly salary for social insurance contributions of each year X Adjustment rate for social insurance contributions of the corresponding year

Note: The above formula applies to the monthly salary for social insurance contributions for individuals:

- employees subject to state-regulated salary policies who start participating in social insurance from January 01, 2016, onwards, receiving lump-sum social insurance or die, with relatives entitled to a lump-sum death benefit from January 01, 2024, to December 31, 2024.

- employees contributing to social insurance according to employer-decided salary policies, receiving pensions, lump-sum retirement allowances, lump-sum social insurance, or die with relatives entitled to a lump-sum death benefit from January 01, 2024, to December 31, 2024.

For employees with contribution periods under both state-regulated salary policies and employer-decided salary policies, the adjusted monthly salary for social insurance contributions starting from January 01, 2016, under state-regulated salary policies, and the monthly salary for social insurance contributions under employer-decided salary policies are adjusted according to Clause 1, Article 2 of Circular 20/2023/TT-BLDTBXH.

(2) Formula to calculate the adjusted monthly income for social insurance contributions

Adjusted monthly income for voluntary social insurance contributions each year = Total monthly income for social insurance contributions of each year X Adjustment rate for voluntary social insurance contributions of the corresponding year 

Note: The above formula applies to the adjusted monthly income for social insurance contributions for those subject to the income adjustment policy for social insurance contributions as per Clause 2, Article 4 of Decree 134/2015/ND-CP, which includes individuals participating in voluntary social insurance, receiving pensions, lump-sum retirement allowances, lump-sum social insurance, or die with relatives entitled to a lump-sum death benefit from January 01, 2024, to December 31, 2024.

- For employees with both mandatory and voluntary social insurance contribution periods, the voluntary social insurance contribution income is adjusted according to Clause 1, Article 3 of Circular 20/2023/TT-BLDTBXH, and the monthly salary for mandatory social insurance is adjusted according to Article 10 of Decree 115/2015/ND-CP and Article 2 of Circular 20/2023/TT-BLDTBXH.

The average monthly salary and income for social insurance contributions used to calculate pensions, lump-sum retirement allowances, lump-sum social insurance, and lump-sum death benefits are calculated according to Clause 4, Article 11 of Decree 115/2015/ND-CP and Clause 4, Article 5 of Decree 134/2015/ND-CP.