In its comments sent to the Ministry of Labor, Invalids and Social Affairs on the plan to adjust pensions, social insurance benefits and monthly allowances for 2024, Vietnam Social Security proposed an 8% increase for pensioners in both the public and private sectors from July 1. The estimated cost is more than VND8,800 billion.

Vietnam Social Security believes that the pension adjustment of 8% from July 1 is appropriate. The increase is based on the consumer price index of 3.35% and GDP reaching 5.05% in 2023; at the same time, it will also reduce the difference in benefits between pensioners before the salary reform and pensioners from July 1 onwards.

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Current pensions are very low and need to be adjusted to increase in proportion to current increases in civil servant salaries.

Previously, at the first working session of the year of the Ministry of Labor, Invalids and Social Affairs, Minister Dao Ngoc Dung said that in 2024, a comprehensive reform of the wage policy will be implemented according to Resolution No. 27 of the Central Committee.

The Minister emphasized that salary reform must go hand in hand with pension policy adjustments in the spirit of not letting retirees fall into more difficulties or disadvantages during reform.

"When salary reform is carried out, the general salary level for workers nationwide increases but pensions are not adjusted well, so beneficiaries will be at a disadvantage. Therefore, it is necessary to calculate in a balanced and harmonious way. If the salary of civil servants and public employees increases by 23.5%, then at least pensions must increase by 15%," said the Minister of Labor, Invalids and Social Affairs.

Don't let pensioners suffer

Speaking with VietNamNet, former Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan said that the Social Insurance and the Ministry of Labor, Invalids and Social Affairs proposed the increase based on the viewpoint of "each side's logic".

Vietnam Social Security proposed the increase based on the provisions of Article 57 of the Law on Social Insurance, which adjusts pensions according to the inflation index. Although it is stipulated in the law, it has not been implemented in the past because pensions are still very low, so when civil servants and public employees' salaries increase, pensions also increase accordingly.

Furthermore, due to the regulation that those who retired before January 1, 1995, the state budget will pay, while those who retired after January 1, 1995, the Social Security will pay. Therefore, when the pension level increases, the Vietnam Social Security is worried about having to spend more, fearing that it will affect the fund.

Meanwhile, Minister Dao Ngoc Dung proposed the 15% rate based on the view that if civil servants and public employees' salaries increase by more than 20%, pensions must also increase accordingly, ensuring that beneficiaries are not disadvantaged.

Mr. Pham Minh Huan said that increasing pensions at a low level ensures the safety of the Social Insurance Fund, but affects retirees. Therefore, the Ministry of Labor, Invalids and Social Affairs needs to agree with the Social Insurance to choose a harmonious solution.

The Ministry of Labor, Invalids and Social Affairs also needs to learn from previous salary increases and soon agree on a plan to submit to the Government to decide early on whether retirees will receive increased salaries from July 1, avoiding having to adjust the time, causing frustration for pensioners.

Former National Assembly delegate Bui Sy Loi said that if civil servants and public employees receive a salary increase, retirees should also receive a corresponding increase. If the increase is too low, retirees will suffer losses due to inflation.

"If pension increases are not careful and do not compensate for inflation, they will only make life more difficult for pensioners," said Mr. Loi.

According to Mr. Loi, salary reform is a process of accumulation over many years in which the previous generation accumulates for the current generation. The fund source of 560,000 billion VND from the Social Insurance Fund is the process of accumulation of the previous generation. If the salary increase is not appropriate, it will not ensure fairness for retirees.