How to calculate pension in Vietnam from July 1, 2024? Will the retirement age of employees in normal working conditions in Vietnam increase in 2024?
Will pensions increase by at least 15% after salary reform in Vietnam in 2024?
At the New Year meeting on the first working day of the Ministry of Labor, Invalids and Social Affairs after the Tet holiday, held on the morning of February 15th, Minister Dao Ngoc Dung stated that in 2024, comprehensive salary policy reforms will be implemented according to Resolution 27-NQ/TW in 2018.
When conducting salary reform, if the overall salary level for workers nationwide increases while pension payments are not adjusted well, pensioners will be at a disadvantage.
Therefore, it is necessary to calculate and balance appropriately. If the salary level for officials and public employees increases by 23.5%, then at least pension payments should increase by 15%.
Therefore, when implementing salary reform in 2024, the minimum pension increase could reach 15% if the salary level for officials and public employees increases by 23.5%.
However, at present, there is still no official document regulating this issue, and the exact percentage increase in pension payments from July 1, 2024, will have to wait for the Government to issue a detailed regulation.
Source: Government Electronic Portal.
How to calculate pension in Vietnam from July 1, 2024? Will the retirement age of employees in normal working conditions in Vietnam increase in 2024?
How to calculate pension in Vietnam from July 1, 2024?
Currently, the calculation of pensions is regulated in Article 1, Article 7 of Decree 115/2015/ND-CP as follows:
Monthly pension = Monthly pension rate x Average monthly salary as the basis for social insurance payment |
(1) Monthly pension
Pursuant to the provisions of Clause 2, Article 7 of Decree 115/2015/ND-CP, Article 16 of Circular 59/2015/TT-BLDTBXH, Article 17 of Circular 59/2015/TT-BLDTBXH.
The monthly pension rate of eligible employees is as follows:
Retired year | Pension rate | Number of years of social insurance payment | Additional rate |
From January 1, 2016 until January 1, 2018 | 45% | 15 years | 2%, for male employees, or 3%, for female employees |
From January 1, 2018 | 45% | - Female employee: 15 years - Male employee: + 16 years if retiring in 2018; + 17 years if retiring in 2019; + 18 years if retiring in 2020; +19 years if retiring in 2021; + 20 years if retiring from 2022 onwards. | 2% for each additional year of social insurance payment |
Where:
- The maximum rate is 75%.
- When calculating the percentage of pension entitlement, if the time of social insurance payment has the odd months, then from 01 to 06 months is calculated as a half year; from 07 to 11 months is calculated as 01 year.
- The monthly pension rate of the employees is reduced by 2% for each year of retirement prior to the prescribed age.
(2) Average monthly salary as the basis for social insurance payment
The average monthly salary as the basis for social insurance payment is specified in Article 9 of Decree 115/2015/ND-CP as follows:
Average monthly salary as the basis for social insurance payment for determination of pension or lump-sum benefit
Average monthly salary as the basis for social insurance payment for determination of pension and lump-sum benefit prescribed in Article 62 of the Law on Social insurance (hereinafter referred to as average monthly salary) shall be determined as follows:
1. Each employee subject to the State-prescribed salary regime and having the entire period of social insurance payment under this salary regime, his/her payment period shall be determined as follows:
a) The last 5 years prior to retirement if he/she begins paying social insurance before January 1, 1995;
b) The last 6 years prior to retirement if he/she begins paying social insurance between January 1, 1995 and December 31, 2000;
c) The last 8 years prior to retirement if he/she begins paying social insurance between January 1, 2001 and December 31, 2006;
d) The last 10 years prior to retirement if he/she begins paying social insurance between January 1, 2007 and December 31, 2015;
dd) The last 15 years prior to retirement if he/she begins paying social insurance between January 1, 2016 and December 31, 2019;
e) The last 20 years prior to retirement if he/she begins paying social insurance between January 1, 2020 and December 31, 2024;
g) The entire payment period if he/she begins paying social insurance from January 1, 2025.
2. Each employee who has the entire payment period the employer-decided salary regime, the average monthly salary as the basis for social insurance payment of the entire period shall apply.
...
Therefore, according to the above formula, the statutory pay rate is not directly adjusted in the calculation of monthly pensions. Therefore, it is expected that when the statutory pay rate is removed from July 1, 2024, the calculation of pensions mentioned above may not change until new regulations are issued.
However, the lowest pension rate according to the provisions of the Law on Social Insurance 2014 is equal to the statutory pay rate. Therefore, when the statutory pay rate is abolished, there may be new guidelines regarding the provisions on the lowest pension rate. Accordingly, it is still necessary to wait for the Government to issue detailed regulations.
Will the retirement age of employees in normal working conditions in Vietnam increase in 2024?
Article 169 of the 2019 Labor Code stipulates that retirement ages of employees in normal working conditions shall be gradually increased to 62 for males by 2028 and 60 for females in 2035.
From 2021, the retirement ages of employees in normal working conditions shall be 60 yeas 03 months for males and 55 years 04 months for females, and shall increase by 03 months for males and 04 months for females after every year.
Thus, it can be seen that the implementation of the roadmap to increase the retirement age for employees working in normal conditions will apply until 2028 (when male employees reach 61 years old) and 2035 ( when female workers reach 60 years old).
Therefore, if nothing changes, in 2024, the retirement age of workers under normal working conditions will continue to increase.
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