What are the examples for pension calculation according to the instructions of the Ministry of Labor, War Invalids and Social Affairs of Vietnam in Circular 59?
- How to calculate pension in Vietnam? What are the components of pension calculation?
- What are the examples for pension rate calculation according to the instructions of the Ministry of Labor, War Invalids and Social Affairs of Vietnam in Circular 59?
- What are the examples for pension calculation in Vietnam?
How to calculate pension in Vietnam? What are the components of pension calculation?
Pursuant to the provisions of Article 7 of Decree 115/2015/ND-CP, pension calculation for retirees participating in compulsory social insurance is carried out according to the following formula:
Monthly pension = Monthly pension rate (%) X Average monthly salary as the basis for social insurance payment
In there:
(1) Monthly pension rate
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:
Year of retirement | Pension rate | The corresponding number of years of social insurance payment | Additional rate |
From January 1, 2016 to before January 1, 2018 | 45% | 15 years | For each additional year of social insurance payment, an additional 2% is calculated 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. | For each additional year of social insurance payment, an additional 2% is calculated. |
In there:
- The maximum pension rate is 75%.
- When calculating the pension rate, if the social insurance payment period has odd months, from 01 month to 06 months is counted as half a year; From 07 months to 11 months is counted as one year.
(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.
...
Thus, the pension calculation formula is carried out according to the above content.
What are the examples for pension calculation according to the instructions of the Ministry of Labor, War Invalids and Social Affairs of Vietnam in Circular 59?
What are the examples for pension rate calculation according to the instructions of the Ministry of Labor, War Invalids and Social Affairs of Vietnam in Circular 59?
Pursuant to Article 17 of Circular 59/2015/TT-BLDTBXH amended by Clause 15, Article 1 of Circular 06/2021/TT-BLDTBXH. Below are a few examples of calculation of pension rate as guided by the Ministry of Labor, War Invalids and Social Affairs of Vietnam:
Example 1:
Ms. G retires in 2023 and has 20 years of social insurance contributions.
The percentage of Ms. G’s pension entitlement is calculated as follows:
- 45% for the first 15 years;
- From the 16th year to the 20th year is 04 years, adding 2% for each year: 04 x 2% = 8%
Thus, Ms. G's pension entitlement rate is 45% + 8% = 53%.
Example 2:
Ms. A is 53 years old, working in normal conditions, suffering from working capacity reduction of 61%, contributing to social insurance for 26 years and 4 months and retiring while receiving pensions from June 1, 2016. Pension percentage of Ms. A is calculated as follows:
- The first 15 years equals 45%;
- The 16th year to the 26th year is 11 years, add: 11 x 3% = 33%;
- 4 months is calculated as half a year, add: 0.5 x 3% = 1.5%
- The sum of percentages above: 45% + 33% + 1.5% = 79.5% (take the maximum value of 75%);
- Ms. A retires 2 years before the age of 55 and thus calculated pension percentage shall be reduced by: 2 x 2% = 4%;
Thus, Thus monthly pension percentage of Ms. A is 75% - 4% = 71%
Example 3:
Ms. K is working in normal conditions, suffering from working capacity reduction of 61%, retiring and receiving monthly pension in April, 2021 at 50 years and 5 months old, contributing to social insurance for 28 years. Her pension percentage is calculated as follows:
- The first 15 years equals 45%;
- The 16th year to the 28th year is 13 years, add: 13 x 2% = 26%;
- Sum of 2 percentages above: 45% + 26% = 71%;
- At the time of retirement, Ms. K is 50 years and 5 months olds (4 years and 11 months before the legitimate retirement age of 55 years and 4 months old), percentage reduction as a result of early retirement is 9% (4 x 2%+ 1% = 9%);
Thus monthly pension percentage of Ms. K is 71% - 9% = 62%.
Example 4:
Mr. Q is born on January 14, 1967, retiring and receiving pensions from November 1, 2021 with 34 years of contributing to social insurance, working in particularly taxing, toxic, hazardous occupations for 15 years, suffering from working capacity reduction of 61%. Pension percentage of Mr. Q is calculated as follows:
- The first 19 years equals 45%;
- The 20th year to the 34th year is 15 years, add: 15 x 2% = 30%;
- Sum of 2 percentages above: 45% + 30% = 75%;
- At the time of retirement, Mr. Q is 54 years, 9 months, and 17 days old, time between early retirement age and legitimate retirement age is under 6 months thus Mr. Q shall not be susceptible to pension percentage reduction;
Thus, monthly pension percentage of Mr. Q is 75%.”
What are the examples for pension calculation in Vietnam?
Below are a few examples of pension calculations as follows:
Example 1:
Ms. Q quit her job and enjoys retirement benefits from May 2022, having paid social insurance for 15 years.
The evolution of Ms. Q's monthly salary paid for social insurance in the 10 years before leaving her job is as follows:
- First 2 years: 8,000,000 VND/month
- The next 4 years: 10,000,000 VND/month
- Last 4 years: 13,000,000 VND/month.
So:
- Ms. Q's pension rate is 45%;
- Average monthly salary paid for social insurance:
[(8,000,000 VNDx24 months)+ (10,000,000 VNDx48 months) + (13,000,000 VNDx48 months)] / 120 months
= 10,800,000 VND/month.
- Ms. Q's monthly pension is:
10,800,000 VND x 45% = 4,860,000 VND/month.
Example 2:
Mr. H, Chief of the Ministry Office, retired to enjoy retirement benefits from April 1, 2016; The total period of social insurance payment is 30 years. Before moving to the position of Chief of the Ministry Office, Mr. H was a prosecutor of the People's Procuracy, with 14 years of professional seniority calculated with a salary coefficient of 5.08. Mr. H's salary for social insurance payments in the last 5 years is as follows (assuming the base salary as of April 2016 is 1,150,000 VND/month).
- From April 2011 to March 2014 = 36 months, salary coefficient is 6.2:
1,150,000 VND x 6.2 x 36 months = 256,680,000 VND.
- From April 2014 to March 2016 = 24 months, salary coefficient is 6.56:
1,150,000 VND x 6.56 x 24 months = 181,056,000 VND.
- The average monthly salary paid for social insurance in the last 5 years as a basis for calculating Mr. H's pension is:
[(256,680,000 VND + 181,056,000 VND) / 60 months] = 7,295,600 VND/month.
- Mr. H's seniority allowance before transferring to the Ministry of Labor, War Invalids and Social Affairs is added to the average monthly salary as the basis for pension calculation as follows:
Mr. H's salary coefficient before transferring to the Ministry of Labor, War Invalids and Social Affairs was 5.08; Professional seniority allowance is calculated at 14%:
1,150,000 VND x 5.08 x 14% = 817,880 VND.
- The average monthly salary paid for social insurance as a basis for calculating pension is:
7,295,600 VND + 817,880 VND = 8,113,480 VND.
- Mr. H's monthly pension is:
8,113,480 VND x 75% = 6,085,110 VND/month.
Example 3:
Mr. M was a former Customs officer, transferred to become a prosecutor of the People's Procuracy, and retired to enjoy retirement benefits from April 1, 2016; The total period of social insurance payment is 27 years, of which 11 years are counted as teachers' seniority and 16 years as procurator seniority. Mr. M's salary for social insurance payments in the last 5 years is as follows (assuming the base salary as of April 2016 is 1,150,000 VND/month).
- From April 2011 to March 2014 = 36 months, salary coefficient is 5.76; Professional seniority is 25%:
1,150,000 VND x 5.76 x 1.25 x 36 months = 298,080,000 VND.
- From April 2014 to March 2016 = 24 months, salary coefficient is 6.10; Professional seniority is 27%:
1,150,000 VND x 6.10 x 1.27 x 24 months = 213,817,200 VND.
- The average monthly salary paid for social insurance in the last 5 years as a basis for calculating Mr. M's pension is:
(359,931,600 VND + 256,365,360 VND) / 60 months = 8,531,620 VND/month.
- Mr. M's monthly pension is:
8,531,620 VND/month x 69% = 5,886,818 VND/month.
Example 4:
Mr. P, a former Customs officer, has 27 years of professional seniority. In April 2013, he transferred to work as a Specialist under the Ministry of Labor, War Invalids and Social Affairs, and retired to enjoy retirement benefits from January 1. April 2016; The total period of social insurance payment is 30 years. Mr. P's salary evolution for social insurance in the last few years before retirement is as follows (assuming base salary as of April 2016 is 1,150,000 VND/month).
- From April 2008 to March 2010 = 24 months, salary coefficient is 6.2, seniority allowance is calculated at 24%;
- From April 2010 to March 2013 = 36 months, salary coefficient is 6.56, seniority allowance is calculated at 27%;
- From April 2013 to March 2016 = 36 months, salary coefficient is 6.92, no seniority allowance.
In case Mr. P, the pension calculated based on the last number of years before retirement is lower than the pension calculated based on the previous number of years with seniority allowance. Therefore, Mr. P's average monthly salary to calculate pension is calculated as follows:
- From April 2008 to March 2010 = 24 months, salary coefficient is 6.2, seniority allowance is calculated as 24%:
1,150,000 VND x 6.56 x 24 months x 1.24 = 212,188,800 VND.
- From April 2010 to March 2013 = 36 months, salary coefficient is 6.56, seniority allowance is calculated as 27%:
1,150,000 VND x 6.56 x 36 months x 1.27 = 344,911,680 VND.
- The average monthly salary paid for social insurance as a basis for calculating Mr. P's pension is:
(212,188,800 VND + 344,911,680 VND) / 60 months = 9,285,008 VND/month.
- Mr. P's monthly pension is:
9,285,008 VND x 75% = 6,963,756 VND/month
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