How to calculate pension for employees participating in compulsory social insurance in Vietnam?
- When is the time for pension enjoyment for employees working under employment contracts in Vietnam?
- How to calculate pension for employees participating in compulsory social insurance in Vietnam?
- Vietnam: Can a person on pension moving to another place of residence change the place for receiving pension?
When is the time for pension enjoyment for employees working under employment contracts in Vietnam?
Pursuant to Clause 1, Article 59 of the Law on Social Insurance 2014, regulations on time for pension enjoyment are as follows:
Time for pension enjoyment
1. 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 this Law, 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.
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Accordingly, the time for pension enjoyment for employees working under employment contracts is the time stated in work cessation decisions issued by employers when the employees have fully satisfied the law-prescribed conditions for pension enjoyment.
How to calculate pension for employees participating in compulsory social insurance in Vietnam?
How to calculate pension for employees participating in compulsory social insurance in Vietnam?
According to the provisions of Article 56 of the Law on Social Insurance 2014, guided by Article 7 of Decree 115/2015/ND-CP, there are provisions as follows:
Monthly pension
The monthly pension prescribed in Article 56 of the Law on Social insurance as follows:
1. The monthly pension of an employee equals his monthly pension rate multiplied by (x) the average monthly salary as the basis for social insurance payment.
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Thus, the 2023 monthly pension for employees participating in compulsory social insurance is calculated according to the following formula:
Monthly pension = Monthly pension rate x Average monthly salary as the basis for social insurance payment.
In there:
(1) The monthly pension rate is calculated as follows:
Female employees: a monthly pension rate of 45% equivalent to 15 years of social insurance payment, which shall be added with 2% for each additional year of social insurance payment provided that the maximum rate is 75%.
According to the provisions of Article 56 of the Law on Social Insurance 2014, the monthly pension of employees shall be reduced by 2% for each year of early retirement. In case an employee’s age is short of up to 6 months compared to the retirement age, his/her pension shall be reduced by 1%; if his/her age is short of under 6 months, his/her pension shall not be reduced due to early retirement.
For example: Ms. A is 53 years old, works under normal conditions, has a 61% reduction in working capacity, has 27 years of social insurance contributions, and quits her job with pension from June 1, 2016. Ms. A's pension rate is calculated as follows:
- The first 15 years are calculated at 45%;
- From the 16th year to the 27th year is 12 years, add: 12 x 3% = 36%;
- The total of the above ratios is: 45% + 36%=81%
Maximum level 75%
- Ms. A retires 2 years before the prescribed age of 55, so the pension rate is calculated to decrease: 2 x 2% = 4%;
Thus, Ms. A's monthly pension entitlement rate is 75% - 4% = 71%.
Male employees: a monthly pension rate of 45% equivalent to 15 years of social insurance payment, which shall be added with 2% for each additional year of social insurance payment provided that the maximum rate is 75%. The way to calculate the pension rate for male employees is similar to the way to calculate the pension rate for female employees.
(2) The average monthly salary as the basis for social insurance payment for people participating in compulsory social insurance will depend on the monthly salary paid for social insurance of the employee and multiplied by the price inflation coefficient. (or the monthly salary adjustment coefficient for social insurance payment) corresponding to each year.
Regarding the average monthly salary as the basis for social insurance payment, it is implemented according to the provisions of Article 62 of the Law on Social Insurance 2014, Article 9 of Decree 115/2015/ND-CP, Article 20 of Circular 59/2015/TT-BLDTBXH.
Note: The lowest monthly pension of employees participating in compulsory social insurance who are eligible to receive pension according to regulations is equal to the statutory pay rate, except for those who work part-time in communes, wards, towns or female employees who work full-time or part-time in communes, wards or towns participate in social insurance when they quit their job and have paid social insurance for 15 to less than 20 years and 55 years old.
Vietnam: Can a person on pension moving to another place of residence change the place for receiving pension?
In Article 115 of the Law on Social Insurance 2014, there are regulations on moving places to receive pensions and social insurance benefits as follows:
Change of places for receiving pension or social insurance allowance
When a person on pension or monthly social insurance allowance moves to another place of residence within the country and wishes to receive social insurance allowance at the new place of residence, he/she shall submit an application to the social insurance agency of the place where he/she currently receives the allowance.
Within 5 working days after receiving such application, the social insurance agency shall settle the receipt of pension or social insurance allowance by the employee at the new place of residence, or issue a written reply clearly stating the reason for its refusal to settle such receipt.
Thus, when a person on pension moves to another place of residence within the country, he/she may change his/her place for receiving pension. the social insurance agency shall settle the receipt of pension within 5 working days after receiving such application.
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