From July 1, the Law on Social Insurance (SI) 2024, which will take effect, will add a chapter regulating supplementary pension insurance to facilitate employers and employees.

The supplementary pension insurance is a financial fund independent of the state budget, which is accounted for, accounted for, has financial reports prepared, and audited in accordance with the provisions of the law on accounting and the law on auditing. Contributions to the supplementary pension insurance fund are managed according to each individual pension account.

The fund is used to pay additional pension benefits to employees, organizational costs and management activities.

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Illustration: Le Anh Dung

The level of additional pension insurance payment is determined based on the balance of the individual pension account at the time of payment, accumulated through investment activities of the Additional Pension Insurance Fund according to market principles.

The State encourages the development of supplementary pension insurance through preferential policies in accordance with tax laws. At the same time, the State improves laws and policies on supplementary pension insurance, and organizes the implementation of supplementary health insurance policies in a professional, modern, and transparent manner.

The State creates conditions for employers and employees to have more options to participate in contributions to receive higher pensions.

Additional pension insurance participants receive a one-time payment.

Former Deputy Minister of Labor, Invalids and Social Affairs (now the Ministry of Home Affairs ) Pham Minh Huan said that the management of supplementary pension insurance is completely different from that of Vietnam Social Security. This is a company that manages an investment trust fund, and the money of participants in this fund must be guaranteed to be safe and generate more profit, ensuring the rights of workers.

Currently, the highest compulsory and voluntary social insurance contribution cannot be higher than 20 times the basic salary. With the basic salary adjusted from 1.8 million VND to 2.34 million VND, from July 1, the highest social insurance contribution will be 46.8 million VND.

Therefore, those who have money and want to pay for a higher pension can participate in voluntary supplementary pension insurance. Participants contribute to this fund to invest, and the profit is added and withdrawn to their personal account.

Decree No. 88 of the Government on the voluntary supplementary pension program stipulates that the payment amount from the individual pension account depends on the value of the individual pension account, the payment plan specified in the pension fund participation contract and the written agreement between the employee and the employer on participation in the pension fund.

Participants receiving payments from their individual retirement accounts have the option of receiving payments monthly or in a lump sum. The State encourages monthly payments.

Retirement participants are entitled to receive monthly payments for a minimum of 10 years. The monthly payment level is chosen by the recipient but cannot exceed the total value of the individual retirement account at the time of retirement divided by 120 months.

After 10 years, the individual pension fund participant can receive a lump sum payment. In the case where the monthly payment is lower than the base salary, the maximum monthly payment will not exceed the base salary until the individual pension account is closed.

The Ministry of Finance is assigned to develop and submit to competent authorities for promulgation, according to its authority, policies and laws on supplementary pension insurance; and to direct and guide the implementation of policies and laws on supplementary pension insurance.

The Ministry of Finance also monitors, evaluates, inspects, and examines the implementation of supplementary pension insurance; handles violations of the law and resolves related complaints and denunciations; and conducts statistical and information work on supplementary pension insurance.

Towards a multi-tiered retirement system

Vietnam entered the population aging process in 2011 when the proportion of people aged 60 and over was 10.1% and people aged 65 and over was 7.2%.

It is worth mentioning that the number of elderly people without pensions or old-age benefits remains high, posing significant challenges to ensuring social security.

In addition, most workers have low pensions when they retire, struggling to meet the minimum needs of life. Therefore, building a multi-level pension system is an inevitable development that has been and is being implemented by countries around the world.

In addition to the compulsory and voluntary social insurance pension regimes, many countries have established supplementary pension regimes. This policy helps workers to have higher pensions when they retire.

In addition, over the past time, social policies, especially social insurance policies, have been gradually amended and supplemented to suit the trend of population aging and expand coverage. In particular, special attention is paid to the elderly, encouraging self-saving and participation in pension funds to help retired workers have additional income in addition to the pension paid under compulsory social insurance.

Continue to increase public sector wages and pensions if the economy is favorable

Continue to increase public sector wages and pensions if the economy is favorable

The Government noted the proposal to continue adjusting and increasing public sector salaries, pensions, social insurance benefits, monthly allowances, and preferential allowances for meritorious people in case the socio-economic situation is more favorable.
Cadres who retire early will not have their pension reduced and will receive additional benefits.

Cadres who retire early will not have their pension reduced and will receive additional benefits.

At the end of the afternoon of December 31, the Ministry of Home Affairs held a press conference to inform about the new points of Decree 177/2024 regulating the regime and policies for cases of non-re-election, re-appointment and officials who quit their jobs or retire at will.
Officials and civil servants who have paid social insurance for 15 years and retire early will keep their pensions.

Officials and civil servants who have paid social insurance for 15 years and retire early will keep their pensions.

Officials and civil servants who do not meet the age requirements for re-election or reappointment, or have paid social insurance for 15 years or more, and voluntarily apply for early retirement, will not have their pension rate deducted and will receive many other benefits.