Will Those Retiring Before July 1, 2024, be Compensated for Pension Differences in the 2024 Wage Reform?
Will retirees before July 1, 2024 be compensated for the difference in pension when salary reform in 2024 is implemented?
On November 10, 2023, the National Assembly approved Resolution 104/2023/QH15 on the state budget estimates for 2024.
From July 1, 2024, a comprehensive reform of salary policy will be implemented according to Resolution 27-NQ/TW 2018.
In the spirit of implementing the salary reform of Resolution 27-NQ/TW 2018, the Minister of Labor, War Invalids, and Social Affairs, Dao Ngoc Dung, reported on the pension increase at the 31st session, afternoon of March 15, to the Standing Committee of the National Assembly. After receiving comments from the Central Steering Committee on salary reform, the Ministry has developed a plan to adjust pensions, divided into 3 groups of beneficiaries as follows:
(1) Ordinary retirees: The pension increase will be calculated reasonably between those currently working and retirees, ensuring harmony between those holding the same position before and after July 1, 2024...
The Minister emphasized that the pension adjustment should not be less than 50% of the salary increase after the reform to ensure balance, and prevent retirees from being disadvantaged by the salary reform.
(2) Retirees before July 1, 2024: The State needs to apply a compensation level to reduce the salary difference between retirees before and after the salary policy reform.
In addition to the social insurance policy, those receiving a budget-based salary upon retirement will be fully entitled to policies like ordinary retirees.
(3) Retirees before 1995: The Minister stated that there will be special policies to significantly increase their pensions.
For this group, the Minister of Labor, War Invalids, and Social Affairs will propose that the Politburo and relevant authorities apply special policies.
The projected pension increase will not be less than 50% of the salary increase after the reform, so retirees before July 1, 2024, will be subject to a compensation level to reduce the salary difference between retirees before and after the salary policy reform. Besides the social insurance policy, this group will also be fully entitled to policies like ordinary retirees.
Will retirees before July 1, 2024 be compensated for the difference in pension when salary reform in 2024 is implemented? (Image from the internet)
How will the pension be calculated from July 1, 2024?
Currently, the way to calculate pensions is specified in Clause 1, Article 7 of Decree 115/2015/ND-CP as follows:
| Monthly pension = Monthly benefit rate x Average monthly salary for social insurance contributions || --- |
(1) Pension benefit rate
Pursuant to 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 benefit rate for eligible workers is as follows:
| Year of Retirement | Pension Benefit Rate | Years of Social Insurance Contribution | Additional Rate || --- | --- | --- | --- || From January 1, 2016 to before January 1, 2018 | 45% | 15 years | Additional 2% for each additional year of social insurance contribution for men and 3% for women. || From January 1, 2018 onwards | 45% | - Female workers: 15 years
- Male workers:
+ 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. | Additional 2% for each additional year of social insurance contribution. |
Among which:
- The maximum pension benefit rate is 75%.
- When calculating the pension benefit rate in cases of fractional months of social insurance contribution, from 01 to 06 months will be rounded up to a half year; from 07 to 11 months will be rounded up to a year.
- In cases where workers retire before the stipulated age, there will be a reduction of 2% for each year of early retirement.
(2) Average monthly salary for social insurance contributions
The average monthly salary for social insurance contributions to calculate the pension is specified in Article 9 of Decree 115/2015/ND-CP as follows:
The average monthly salary for social insurance contributions to calculate pensions and one-time allowances
The average monthly salary for social insurance contributions to calculate pensions and one-time allowances stipulated in Article 62 of the Social Insurance Law is defined as follows:
1. Workers subject to state-regulated salary policies for all their social insurance contribution period will calculate the average monthly salary for the years of social insurance contribution before retirement as follows:
a) Those who began participating in social insurance before January 1, 1995, will calculate the average monthly salary for the last 05 years before retirement;
b) Those who began participating in social insurance from January 1, 1995, to December 31, 2000, will calculate the average monthly salary for the last 06 years before retirement;
c) Those who began participating in social insurance from January 1, 2001, to December 31, 2006, will calculate the average monthly salary for the last 08 years before retirement;
d) Those who began participating in social insurance from January 1, 2007, to December 31, 2015, will calculate the average monthly salary for the last 10 years before retirement;
e) Those who began participating in social insurance from January 1, 2016, to December 31, 2019, will calculate the average monthly salary for the last 15 years before retirement;
f) Those who began participating in social insurance from January 1, 2020, to December 31, 2024, will calculate the average monthly salary for the last 20 years before retirement;
g) Those who began participating in social insurance from January 1, 2025, onwards will calculate the average monthly salary for the entire period.
2. Workers who have all their social insurance contribution period based on salaries decided by the employer will calculate the average monthly salary for the entire period.
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Thus, according to the above formula, the statutory pay rate is not directly adjusted in the way of calculating the monthly pension, so it is projected that when the statutory pay rate is abolished from July 1, 2024, the above pension calculation method may not change until there are new regulations.
However, the minimum pension level according to the provisions of Social Insurance Law 2014 is equal to the statutory pay rate. Therefore, when the statutory pay rate is abolished, there may be new guidance regarding the minimum pension level, and the pension when the statutory pay rate is abolished still needs to wait for detailed regulations from the Government.
Do retirees have to contribute to health insurance?
Based on Article 2 of Decree 146/2018/ND-CP on groups whose health insurance contributions are paid by the social insurance agency:
Groups whose health insurance contributions are paid by the social insurance agency
1. People receiving pensions, monthly labor incapacitation allowances.
2. People receiving monthly social insurance allowances due to occupational accidents or occupational diseases; rubber workers receiving monthly allowances as regulated by the Government.
3. Workers on leave receiving sickness allowances due to illnesses on the list of long-term treatment needs issued by the Ministry of Health.
4. Former commune-level officials, ward, and commune-level town officials who retired and are receiving monthly social insurance allowances.
5. Workers on leave receiving maternity policies when giving birth or adopting a child.
6. People receiving unemployment benefits.
According to the above regulations, retirees are still subject to health insurance contributions, but the contributions will be paid by the social insurance agency.
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