The Labor Code 2019 of Vietnam will officially take effect from January 1, 2021. From this date, there will be many changes related to the pension paid to employees.
Article table of contents
Changes to pensions paid to employees (Illustrative image)
1. Changes in the monthly pension paid to employees:
The monthly pension paid to employees is calculated as follows:
Monthly pension = [Monthly pension rate (%)] x [Average monthly salary serving as the basis for paying social insurance premiums]
In which:
Male employees:
- For male employees participating in compulsory social insurance, starting retirement between January 1, 2021, and December 31, 2021:
The monthly pension rate is determined as follows:
+ Male employees who retire from January 1, 2021, to December 31, 2021 and have paid social insurance premiums for 19 years are entitled to 45% (currently, it is 18 years); male employees who retire from January 1, 2022 and have paid 20 years is entitled to 45%.
+ After that, for each additional year of paying , male employees are entitled to an extra 2%. However, the maximum monthly pension rate is 75%.
If an employee retires before the stipulated age due to reduced working capacity, the monthly pension rate is calculated as above, then reduced by 2% for each year of early retirement.
- For male employees participating in voluntary social insurance and starting retirement between January 1, 2021, and December 31, 2021:
The monthly pension rate is determined as follows:
+ Male employees who retire from January 1, 2021, to December 31, 2020 have paid 19 years are entitled to 45% (currently, it is 18 years); male employees who retire from January 1, 2022 and have paid 20 years are entitled to 45%.
+ After that, for each additional year, male employees are entitled to an extra 2%. However, the maximum monthly pension rate is 75%.
For female employees: This change does not affect female employees:
+ Female employees who have paid 15 years are entitled to 45%.
+ After that, for each additional year of paying , the employee is entitled to an extra 2%. However, the maximum monthly pension rate is 75%.
The average monthly salary serving as the basis for paying social insurance premiums is calculated based on the average monthly income serving as the basis for paying social insurance premiums for the entire payment period. The monthly income used to calculate the average monthly income serving as the basis for paying social insurance premiums of employees is adjusted based on the consumer price index of each period according to the Government of Vietnam's regulations (detailed regulations in Article 4 of Decree 134/2015/ND-CP).
2. Changes in the eligibility requirements for receiving pension
According to current regulations in Article 187 of the Labor Code 2012, the retirement age for males is 60 years, and for females is 55 years.
From 2021, the retirement age for employees in normal working conditions is 60 years and 3 months for male employees and 55 years and 4 months for female employees; thereafter, each year increases by 3 months for male employees and 4 months for female employees.
Article 169. Retirement Age
1. The employee who meets the conditions for social insurance premium payment period prescribed by law on social insurance is entitled to a pension when reaching the retirement age.
2. The retirement age for employees in normal working conditions is adjusted according to the roadmap until it reaches 62 years for male employees in 2028 and 60 years for female employees in 2035.
Starting from 2021, the retirement age for employees in normal working conditions is 60 years and 3 months for male employees and 55 years and 4 months for female employees; thereafter, each year increases by 3 months for male employees and 4 months for female employees.
Thus, from 2021, the retirement age is adjusted upwards according to Clause 2, Article 169 of the Labor Code 2019. Male employees are entitled to retire at 60 years and 3 months, and female employees are entitled to retire at 55 years and 4 months (in normal working conditions).
When reaching retirement age and having 20 years of social insurance premium payment, employees can retire and receive a pension.
3. Changes in eligibility requirements for receiving pension when reducing labor capacity
From 2021, eligibility requirements for receiving pension when reducing labor capacity are newly stipulated in point b, clause 1 of Article 219 of the Labor Code 2019. To be specific::
When an employee has paid 20 years or more of social insurance, they are entitled to a pension at a lower rate if they fall into one of the following cases:
- Reduced labor capacity from 61% to under 81% and are at least 5 years younger than the retirement age (i.e., in 2021, men must be at least 55 years and 3 months, and women must be at least 50 years and 4 months; previously, men must be 55 years old, and women 50 years old).
- Reduced labor capacity by 81% or more, and are at least 10 years younger than the retirement age (i.e., in 2021, men must be at least 50 years and 3 months, and women must be at least 45 years and 4 months; previously, men must be 50 years old, and women must be 45 years old).
Legal Basis:
- Circular 59/2015/TT-BLDTBXH;
Ngoc Tai
- Key word:
- pensions paid to employees in 2021
