From 2021, how has the calculation of retirement pension for workers changed? The following article will address this issue.
Article table of contents
Guidelines on how to calculate pension for workers from 2021 (Illustration)
Pursuant to Article 7 of Decree 115/2015/ND-CP of Vietnam's Government, the monthly retirement pension is calculated as follows:
| Monthly Retirement Pension of the Worker | = | Percentage of Monthly Retirement Pension | X | Average Monthly Salary on which Social Insurance Premiums are Based |
In which:
1. Percentage of Monthly Retirement Pension
According to Article 56 of the Social Insurance Law 2014 of Vietnam, the minimum percentage is 45% and the maximum is 75%. If the worker retires from 2021 onwards:
- For male workers: In 2021, it is equivalent to 45% of the average monthly salary on which social insurance was based for 19 years of paying social insurance premiums, and each additional year will add 2%, with a maximum of 75%. From 2022, it will be 45% of the average monthly salary on which social insurance was based for 20 years of paying social insurance premiums.
Example 1: Mr. X worked under normal conditions and was old enough to retire in 2021. By the time of retirement, he has paid social insurance premiums for 29 years. His monthly retirement pension is calculated as follows: 19 years of paying social insurance premiums = 45%; the remaining 10 years of paying social insurance premiums = 10 x 2% = 20%. Hence, Mr. X's monthly retirement pension will be 65% of the average monthly salary on which social insurance premiums are based.
Example 2: Mr. Y retires in 2022 and by the time of retirement, he has paid social insurance premiums for 30 years. Hence, Mr. Y’s retirement pension will be 65% of the average monthly salary on which social insurance premiums are based: 20 years of paying social insurance premiums = 45%; the remaining 10 years of paying social insurance premiums = 10 x 2% = 20%.
- For female workers: 45% of the average monthly salary on which social insurance was based for 15 years of paying social insurance premiums, and each additional year will add 2%, with a maximum of 75%. This rule has not changed and has been applied since 2018.
Example: Mrs. Z participated in social insurance for 25 years and in 2021 she retired, therefore, Mrs. Z is entitled to a retirement pension equal to 65% of the average monthly salary on which social insurance premiums were based (15 initial years of paying social insurance premiums = 45%; the subsequent 10 years of paying social insurance premiums = 10 x 2% = 20%).
2. Average Monthly Salary on which Social Insurance Premiums are Based
According to Article 9 of Decree 115/2015/ND-CP, the average monthly salary on which social insurance premiums based from 2021 to calculate the retirement pension for workers is specified as follows:
- Started participating in social insurance before January 1, 1995: The average of the monthly salary on which social insurance premiums were based for the last 05 years before retirement is taken;
- Started participating in social insurance from January 1, 1995 to December 31, 2000: The average of the monthly salary on which social insurance premiums were based for the last 06 years before retirement is taken;
- Started participating in social insurance from January 1, 2001 to December 31, 2006: The average of the monthly salary on which social insurance premiums were based for the last 08 years before retirement is taken;
- Started participating in social insurance from January 1, 2007 to December 31, 2015: The average of the monthly salary on which social insurance premiums were based for the last 10 years before retirement is taken;
- Started participating in social insurance from January 1, 2016 to December 31, 2019: The average of the monthly salary on which social insurance premiums were based for the last 15 years before retirement is taken;
- Started participating in social insurance from January 1, 2020 to December 31, 2024: The average of the monthly salary on which social insurance premiums were based for the last 20 years before retirement is taken;
- Started participating in social insurance from January 1, 2025 onwards: The average of the monthly salary on which social insurance premiums were based for the entire period is taken.
Workers who have paid social insurance premiums entirely according to the salary policies decided by the employer: The average monthly salary on which social insurance premiums were based for the entire period of social insurance participation is taken.
Workers who have paid social insurance premiums according to both the state's salary policy and the employer's salary policy: The average monthly salary on which social insurance premiums were based for the relevant periods is taken concurrently.
Workers who have paid social insurance premiums for 15 years or more will take the highest salary of heavy, hazardous, dangerous work, etc., or the salary prior to a sector change corresponding to the average calculation period mentioned above if they are officers in the army, police, etc.
Workers who paid social insurance premiums before October 1, 2004, according to the state salary policy and who receive social insurance from January 1, 2016 onwards: The monthly salary on which social insurance premiums were based, serving as the basis for social insurance benefits, will be recalculated according to the salary policy at the time of retirement.
Workers who have paid social insurance premiums with professional seniority allowances and then transferred to another sector without such allowances: The average monthly salary serving as the basis for calculating the retirement pension at the time of retirement plus the seniority allowance (if applicable) based on the time of social insurance participation including such allowances recalculated according to the salary policy at the retirement time will be used to calculate the retirement pension.
