Changes in pensions and social insurance when reforming salaries in 2024

Increase pensions and social insurance benefits

On November 10, 2023, the National Assembly passed Resolution No. 104/2023/QH15 on the state budget estimate for 2024.

Accordingly, from July 1, 2024, comprehensive reform of wage policy will be implemented according to Resolution No. 27-NQ/TW dated May 21, 2018 of the 7th Conference of the 12th Central Executive Committee. At the same time, adjustments will be made to pensions, social insurance benefits, monthly allowances, preferential allowances for meritorious people and a number of social security policies currently linked to the basic salary.

However, to determine how much the pension will increase in 2024, we are waiting for detailed regulations from the Government .

The Department of Labor, Invalids and Social Affairs informed that it will try to advise that the pension increase be at least 15% compared to the salary of civil servants and public employees, which will increase by 23.5%; advise to raise the standard social allowance from 360,000 VND/month to 500,000 VND/month or 750,000 VND/month (this amount will be multiplied by a coefficient of 1-3, depending on the case according to regulations).

Calculations show that if the social allowance standard is raised to 750,000 VND, the elderly without pension and belonging to poor households will receive a subsidy = 750,000 VND x 3 = 2,250,000 VND/month; the elderly without pension or monthly social insurance allowance will receive 750,000 VND/month.

Changes to the calculation of minimum pension and some benefits

Current regulations, according to Clause 5, Article 56 of the 2014 Social Insurance Law, the lowest pension level when participating in compulsory social insurance is equal to the basic salary.

From January 1 to June 30, 2024, the basic salary will continue to be applied at 1.8 million VND/month and the salary will be calculated by the coefficient x basic salary. Therefore, the lowest pension is 1.8 million VND/month.

From July 1, the basic salary will be abolished and replaced by a new salary regime according to Resolution 27. Therefore, there will be a new mechanism for determining the pension level. The Government will have a document specifying or guiding how to determine the lowest pension level.

In addition, with the draft revised Social Insurance Law expected to be passed in 2024, there will be adjustments to social insurance benefits such as childbirth allowance, postpartum recovery, post-sickness recovery, and monthly death benefits.

According to the 2014 Social Insurance Law, social insurance benefits are calculated based on the basic salary. For example, one-time benefits when giving birth, post-natal care benefits, post-sick care benefits, funeral benefits, monthly death benefits.

Therefore, when there is no longer a salary coefficient and a basic salary, these allowances will also change. Currently, the Government is proposing allowances linked to the basic salary equal to the current highest level and specified in specific amounts, such as post-natal and sick leave allowance of 540,000 VND/day; one-time allowance when giving birth is 3.6 million VND/child.

Change the social insurance price index

The 2024 social insurance price index, implemented according to Circular No. 01/2023/TT-BLDTBXH, affects both compulsory and voluntary social insurance participants. The change in the social insurance price index from 2023 to 2024, although not specifically announced, if increased, will lead to a corresponding increase in regimes such as one-time social insurance, monthly pension, one-time retirement allowance and one-time death benefit. This not only contributes to improving the rights of employees but also reflects the flexibility and sensitivity of the policy to economic fluctuations.

Change in health insurance contribution level

According to the regulations, the health insurance contribution rate for households is updated: the first person in the household will pay 4.5% of the basic salary, while the following members have a decreasing contribution rate: the second person pays 70%, the third person pays 60% and the fourth person pays 50% compared to the contribution rate of the first person. From the fifth person onwards, the contribution rate is reduced to 40%.

For students, the monthly contribution is 4.5% of the base salary, with 30% support from the state budget and the remaining 70% paid by the individual.

However, from July 1, 2024, the salary system will be reformed, eliminating the current basic salary.

This may lead to a review and new guidance on health insurance contribution and benefits for groups such as households and students, reflecting the flexibility and adaptability of the policy to socio-economic realities.

One-time medical examination and treatment cost change is covered 100%

The highlight of the adjustments is the abolition of the basic salary as a reference for medical examination and treatment costs. Previously, medical examination and treatment costs under 15% of the basic salary (about 270,000 VND) would be 100% covered by health insurance. However, from July 1, 2024, this regulation will no longer be effective.

This change opens a new direction, where regulations on medical expenses are adjusted to better suit the current socio-economic situation. This not only affects the way people access medical services but also reflects a major change in social security policy. This change is expected to bring certain benefits to the people.

Source