Reducing the minimum social insurance contribution period and expanding the categories of people eligible for pension benefits.

In Resolution No. 114/NQ-CP dated July 28, 2023, from the July 2023 Government meeting on the draft Law on Social Insurance (amended), the Government agreed to reduce the minimum social insurance contribution period to receive a pension from 20 years to 15 years.

The Ministry of Labour, Invalids and Social Affairs proposes that workers who reach retirement age and have contributed to social insurance for 15 years or more should be entitled to a pension.

Workers who have contributed to social insurance for 15 years may receive a more modest pension than those with longer contribution periods, but they receive a monthly pension, which is periodically adjusted by the State, and are entitled to health insurance.

In its submission to the Government regarding the draft Law on Social Insurance (amended), the Ministry of Labor, Invalids and Social Affairs proposed amending the regulation that employees who reach retirement age and have contributed to social insurance for 15 years or more are entitled to a monthly pension.

This regulation aims to provide opportunities for those who join social insurance late (starting at age 45-47) or those who do not participate continuously, resulting in not having accumulated 20 years of social insurance contributions by retirement age, to receive a monthly pension instead of a lump-sum social insurance payment.

The Ministry of Labour, Invalids and Social Affairs stated that the regulation reducing the minimum number of years of social insurance contributions required to receive a monthly pension from 20 years to 15 years only applies to cases retiring under Article 71 and not to cases retiring under Article 72 (early retirement before the prescribed age). For cases retiring early before the prescribed age, the pension benefit rate will be reduced by 2% for each year of early retirement.

The monthly pension of eligible workers as stipulated in Article 71 is calculated as 45% of the average monthly salary used for social insurance contributions; corresponding to a social insurance contribution period of 20 years for male workers and 15 years for female workers, with an additional 2% added for each additional year of contribution, up to a maximum of 75%.

In the case of male workers who meet the conditions stipulated in Article 71 of this Law and have contributed to social insurance for a period of 15 years to less than 20 years, each year of social insurance contribution corresponds to a pension entitlement rate of 2.25%.

In cases where an employee is eligible for a pension but has contributed to social insurance for less than 15 years, each year of social insurance contribution corresponds to a pension entitlement rate of 2.25%.

The Ministry of Labour, Invalids and Social Affairs believes that, with the above regulations, the pension of those who have contributed to social insurance for 15 years or more may be lower than those with longer contribution periods if the salary used as the basis for mandatory social insurance contributions or the income used as the basis for voluntary social insurance contributions is the same.

However, those who were previously ineligible for a pension and received a lump-sum social insurance payment (if they did not choose to voluntarily pay a lump sum for the remaining period) will now have the opportunity to receive a monthly pension.

Thus, although the pension may be more modest than those with longer contribution periods, a stable monthly pension, regularly adjusted by the State, and health insurance contributions paid by the social insurance fund during the pension period will contribute to a better life for workers in their old age.

STRONG

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