Is Wage Reform Being Implemented for Retirees? How Will Pension Payments Change?
Can retirees implement wage reform?
According to the above regulations, currently for employees who are subject to the wage policies stipulated by the State and started participating in social insurance before January 1, 2016, the wages on which social insurance premiums were paid as the basis for calculating the average monthly wage of social insurance premiums will be adjusted according to the statutory pay rate at the time of benefiting from the policies.
Thus, if the wage reform of 2024 eliminates the statutory pay rate, determining the wage on which social insurance premiums were paid as a basis for calculating the average monthly wage of social insurance premiums for these subjects will encounter inconsistencies compared to current regulations.
Additionally, the Minister of Labor, Invalids, and Social Affairs has stated that wage reform must also consider the wages for retirees and social protection subjects.
"Currently, pensions are paid according to the statutory pay rate. When the statutory pay rate is eliminated from 07/01/2024, how will retirees' wages be calculated? Are those receiving pensions included in the wage reform along with the public sector, and if they are, what percentage will the increase be?"
"Therefore, I propose that wage reform in the public sector must be accompanied by wage reform in the enterprise sector and appropriately adjust the wages of retirees and other social subjects," emphasized the Minister of Labor, Invalids, and Social Affairs.
It is expected that from July 1, 2024, wage reform will be implemented, eliminating the statutory pay rate. At that time, pension policies for retirees may also be adjusted in line with the new regulations on wage reform.
Thus, if nothing changes, starting from July 1, 2024, when wage reform is implemented for officials and public employees, armed forces, and workers in enterprises, the wage of retirees will also be adjusted accordingly.
Source: The Government of Vietnam Newspaper
Will wage reform be implemented for retirees? How will pensions change?
What is the retirement age for employees under normal conditions?
Based on Article 169 of the 2019 Labor Code, the regulation is as follows:
Retirement age
1. Employees who meet the conditions for the period of social insurance contribution as stipulated by the law on social insurance are entitled to a pension when they reach retirement age.
2. The retirement age for employees under normal working conditions will be gradually adjusted until reaching 62 for men by 2028 and 60 for women by 2035.
From 2021, the retirement age for employees under normal conditions is 60 years and 03 months for men and 55 years and 04 months for women; subsequently, each year will add 03 months for men and 04 months for women.
3. Employees with reduced working capacity; doing exceptionally heavy, hazardous, or dangerous jobs; doing heavy, hazardous, or dangerous jobs; working in regions with special socio-economic difficulties may retire at an age lower but not exceeding 05 years younger than the age stipulated in Clause 2 of this Article at the time of retirement unless otherwise stipulated by law.
4. Employees with high professional qualifications and technical skills and in some special cases may retire at an age higher but not exceeding 05 years older than the age stipulated in Clause 2 of this Article at the time of retirement unless otherwise stipulated by law.
5. The Government of Vietnam provides detailed regulations on this Article.
Currently, the retirement age for employees under normal conditions is 60 years and 9 months for men and 56 years for women.
How will pensions change with the implementation of wage reform?
The Prime Minister of the Government of Vietnam has stated that the Government of Vietnam will implement wage policy reform for the public sector according to Resolution 27-NQ/TW of 2018 of the Central Committee from July 1, 2024.
Simultaneously, the Government of Vietnam will continue to adjust the regional minimum wage and wage policies for the enterprise sector according to the regulations.
From 2025 onwards, wages will continue to be adjusted to increase an average of 7% per year for officials and public employees, armed forces until the lowest wage equals or exceeds the minimum wage of region I in the enterprise sector.
Currently, Clause 1 of Article 7 of Decree 115/2015/ND-CP regulates the calculation of pensions as follows:
| Monthly Pension = Monthly Benefit Rate x Average Monthly Wage of Social Insurance Premiums || --- |
According to the above regulation, pensions are calculated based on the benefit rate and the average monthly wage of social insurance premiums.
In cases where the new wage (increased by wage reform) has been received and retirement occurs after the implementation date of wage reform, the average monthly wage of social insurance premiums will increase.
When wage reform is implemented from July 1, 2024, if the way of calculating pensions remains unchanged, the monthly benefit rate remains the same, and the average monthly wage of social insurance premiums increases, the pension will also increase accordingly.
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