The Law on Social Insurance 2014 adopted by the National Assembly of Vietnam on November 20, 2014, effective from January 1, 2016, contains several noteworthy provisions. Among these is the adjustment in the calculation method of pensions before and after January 1, 2018.
Article table of contents
Article 56 of the Law on Social Insurance 2014 outlines the monthly pension for employees in Vietnam as follows:
- From January 01, 2018 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%.
- Since January 1, 2018, the monthly pension of employees will equal 45% of the average monthly salary on which social insurance premiums are based and correspond to the following period of social insurance premium payment.
The pension rate shall be added with 2% for each additional year of social insurance premium payment (for both males and females, instead of 3% for females as currently stipulated), but must not exceed 75%. Also, from this time, the roadmap for increasing the retirement age for both males and females will be gradually implemented. To be specific:
- 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;
- For female employees who retire in 2018, it is 15 years;
| Year of Retirement | Number of years of SI premium payment corresponding to the pension rate of 45% |
| 2018 | 16 years |
| 2019 | 17 years |
| 2020 | 18 years |
| 2021 | 19 years |
| From 2022 onward | 20 years |
The monthly pension of employees who retire before the regulated age will be 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.
The age milestone for calculating the years of early retirement to determine the reduction in pension rate is established as follows:
- Employees working under normal conditions will base the milestone age as 60 years for males and 55 years for females;
- Employees working in arduous, toxic, dangerous jobs or particularly arduous, toxic, dangerous jobs, or in regions with a region-based allowance coefficient of 0.7 or higher, will base the milestone age as 55 years for males and 50 years for females;
- Employees working in coal mining will base the milestone age as 50 years;
- In cases where the employee's records do not specify the date or month of birth, January 01 of the birth year will be used to calculate the age as the basis for determining the years of early retirement.
Additionally, from January 01, 2018, two more categories are included in the compulsory SI participation:
- Employees with employment contracts of 01-03 months; and
- Part-time employees at commune, ward, and town.
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