Vietnam: Do employees who pay social insurance receive retirement pensions?
Vietnam: Do employees who pay social insurance receive retirement pensions?
According to Article 4 of the Law on Social Insurance 2014, there are regulations on social insurance regimes as follows:
Social insurance benefits
1. Compulsory social insurance covers the following benefits:
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d/ Retirement;
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2. Voluntary social insurance covers the following benefits:
a/ Retirement;
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Pursuant to Article 2 of the Law on Social Insurance 2014, the specific subjects of application are specified as follows:
Subjects of application
1. Employees being Vietnamese citizens shall be covered by compulsory social insurance, including:
a/ Persons working under indefinite-term labor contracts, definite-term labor contracts, seasonal labor contracts or contracts for given jobs with a term of between full 3 months and under 12 months, including also labor contracts signed between employers and at-law representatives of persons aged under 15 years in accordance with the labor law;
b/ Persons working under labor contracts with a term of between full 1 month and under 3 months;
c/ Cadres, civil servants and public employees;
d/ Defense workers, public security workers and persons doing other jobs in cipher organizations;
dd/ Officers and professional army men of the people's army; officers and professional non-commissioned officers and officers and technical non- commissioned officers of the people's public security; and persons engaged in cipher work and enjoying salaries like army men;
e/ Non-commissioned officers and soldiers of the people’s army; non- commissioned officers and soldiers on definite-term service in the people’s public security; army, public security and cipher cadets who are entitled to cost- of-living allowance;
g/ Vietnamese guest workers defined in the Law on Vietnamese Guest Workers;
h/ Salaried managers of enterprises and cooperatives;
i/ Part-time staffs in communes, wards and townships.
2. Employees who are foreign citizens working in Vietnam with work permits or practice certificates or practice licences granted by competent Vietnamese agencies shall be covered by compulsory social insurance under the Government’s regulations.
3. Employers covered by compulsory social insurance include state agencies, non-business units and people's armed forces units; political organizations, socio-political organizations, socio-politico-professional organizations, socio-professional organizations and other social organizations; foreign agencies and organizations, and international organizations operating in the Vietnamese territory; enterprises, cooperatives, individual business households, cooperative groups, and other organizations and individuals that hire or employ employees under labor contracts.
4. Persons covered by voluntary social insurance are Vietnamese citizens aged full 15 years or older and not defined in Clause 1 of this Article.
5. Agencies, organizations and individuals involved in social insurance.
The subjects defined in Clauses 1, 2 and 4 of this Article are below collectively referred to as employees.
From the above regulations, it can be seen that there are currently two social insurance regimes: compulsory social insurance and voluntary social insurance.
Both types of social insurance have retirement benefits for employees.
Thus, it can be understood that as long as employees participate in one of the two social insurance regimes mentioned above, they can receive a pension when meeting the conditions prescribed by law.
Vietnam: Do employees who pay social insurance receive retirement pensions? (Image from the Internet)
What are the retirement ages for employees in Vietnam?
Article 169 of the Labor Code 2019 stipulates the retirement ages as follows:
Retirement ages
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2. 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.
3. The retirement ages of employees who suffer from work capacity reduction; doing laborious, toxic or dangerous works; working in highly disadvantaged areas may be younger by up to 05 years than the retirement ages specified in Clause 2 of this Article, unless otherwise prescribed by law.
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Accordingly, the current retirement age for male employees is 60 years and 9 months and for female employees, the retirement age is 56 years old.
How to calculate the retirement pensions for employees in Vietnam?
According to Article 56 of the Law on Social Insurance 2014, the method of calculating pension for premature retirees is as follows:
Monthly pension
1. From the effective date of this Law to January 1, 2018, the monthly pension of employees who fully satisfy the conditions specified in Article 54 of this Law must equal 45% of the average monthly salary on which social insurance premiums are based as prescribed in Article 62 of this Law, corresponding to 15 years of social insurance premium payment, which shall be added with 2%, for men, or 3%, for women, for each additional year of social insurance premium payment, but must not exceed 75%.
2. Since January 1, 2018, the monthly pension of employees who fully satisfy the conditions specified in Article 54 of this Law will equal 45% of the average monthly salary on which social insurance premiums are based as prescribed in Article 62 of this Law, and correspond to the following period of social insurance premium payment:
a/ For male employees who retire in 2018, 2019, 2020 and 2021 and since 2022, it is 16 years, 17 years, 18 years, 19 years and 20 years, respectively;
b/ For female employees who retire since 2018, it is 15 years;
For employees defined at Points a and b of this Clause, the pension rate shall be added with 2% for each additional year of social insurance premium payment, but must not exceed 75%.
3. The monthly pension of employees who fully satisfy the conditions specified in Article 55 of this Law shall be calculated as stipulated in Clauses 1 and 2 of this Article, and 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.
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Accordingly, the current pension benefits of employees are implemented according to the above regulations.
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