What is the Maximum Pension an Employee Can Receive?

To be specific, according to the provisions of the Law on Social Insurance 2014, pension is calculated according to the following formula:

Pension = Pension benefit rate x Average monthly salary used for Social Insurance contributions

Wherein:

- The highest pension benefit rate for employees is 75% (based on the number of years of Social Insurance contributions specified in Clause 2, Article 56 of the Law on Social Insurance 2014);

- The monthly salary used for Social Insurance contributions is capped at a maximum of 20 times the statutory pay rate and a minimum not lower than the regional minimum wage at the time of contribution (this provision has been present since the Law on Social Insurance 2006 effective from January 1, 2007).

Therefore, in the case of an employee participating in Social Insurance from January 1, 2007 onwards, a person with a pension benefit rate of 75% and a monthly salary used for Social Insurance contributions equal to 20 times the statutory pay rate will receive the highest pension.

However, since the Law on Social Insurance 2006, which came into effect on January 1, 2007, stipulated the cap on the monthly salary used for Social Insurance contributions at a maximum of 20 times the statutory pay rate, there are cases where employees who have periods of work before January 1, 2007, are not subject to this cap. These employees might have a monthly salary used for Social Insurance contributions higher than 20 times the statutory pay rate, resulting in a significantly higher pension.

Duy Thinh

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