In 2020, the maximum social insurance contribution of officials and public employees increased sharply

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If this proposal is approved, the statutory pay rate for the year 2020 will increase by VND 110,000 per month compared to 2019, marking the highest increase in the statutory pay rate in recent years. Along with this increase, the maximum salary used to calculate social insurance contributions for officials and public employees will also increase accordingly.

According to the current regulations in Clause 1, Article 85, Clause 1, Article 89 of the Law on Social Insurance 2014 and Clause 1, Article 6 of Decision 595/QD-BHXH, the social insurance contribution amount for officials and public employees is specified as follows:

Social Insurance Contribution = Monthly Salary x 8% = (Salary + Allowances calculated according to statutory pay rate) x 8%

Thus, if the proposal of the Government of Vietnam is approved, from July 1, 2020, the statutory pay rate for officials and public employees will be VND 1,600,000 per month. Accordingly, the social insurance contribution amount will also increase, and the maximum salary used to calculate social insurance will change significantly.

Specifically, Article 89 of the Law on Social Insurance 2014 stipulates that if the salary exceeds 20 times the statutory pay rate, the monthly salary for social insurance contribution is capped at 20 times the statutory pay rate.

Therefore, the maximum salary for social insurance calculation is expected from July 1, 2020 = VND 1,600,000 x 20 = VND 32,000,000, an increase of VND 2,200,000 compared to the current level (the current level is VND 29,800,000 corresponding to a statutory pay rate of VND 1,490,000).

Nguyen Trinh

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