Pension increase adjustment

From July 1, 2025, the Social Insurance Law 2024 will come into effect and continue to adjust pensions for employees.

Accordingly, pensions are adjusted based on the increase in the consumer price index in accordance with the capacity of the state budget and the social insurance fund.

In addition, the pension increase will be adjusted appropriately for those with low pensions and those who retired before 1995, ensuring that the gap between retirees in different periods is narrowed.

The Government regulates the time, subjects and levels of pension adjustment.

According to Decree 75/2024 of the Government, from July 1, 2024, the pension, social insurance allowance and monthly allowance of June 2024 will be adjusted to increase by 15%.

For those who are receiving pensions, social insurance benefits, and monthly allowances according to regulations, after adjusting an increase of 15% on pensions, social insurance benefits, and monthly allowances, with a benefit level lower than 3.5 million VND/month, the adjustment will increase by 300,000 VND/person/month for those with a benefit level below 3.2 million VND/person/month; Increase by 3.5 million VND/person/month for those with a benefit level from 3.2 million VND/person/month to less than 3.5 million VND/person/month.

Buddhist Monks (23).jpg (Chi Hieu)
From 2025, when the revised Law on Social Insurance takes effect, pension policies will have many changes. Photo: Chi Hieu.

The pension, social insurance allowance, and monthly allowance after adjustment according to the above regulations are the basis for calculating the adjustment of pension, social insurance allowance, and monthly allowance in subsequent adjustments.

Change the way pensions are calculated

Vietnam Social Security informs that according to the new regulations of the Social Security Law 2024, employees who have paid social insurance for 15 years will receive a pension.

Monthly pension rate for female employees is calculated at 45% corresponding to 15 years of social insurance contribution, then for each additional year of contribution, an additional 2% is calculated; the maximum level is 75%.

For men, the monthly pension rate is calculated at 45% corresponding to 20 years of social insurance contributions, then for each additional year of contributions, an additional 2% is calculated; the maximum level is 75%.

In case of social insurance payment period from 15 years to less than 20 years, monthly pension is equal to 40% of average salary used as basis for social insurance payment corresponding to 15 years of social insurance payment, then for each additional year of payment, 1% is added.

Calculate pension for the entire period of social insurance payment

According to new regulations, employees participating in social insurance from 2025 will not have their pension calculated on the last years of social insurance payment.

According to the provisions of the 2014 Social Insurance Law, the average salary used as the basis for social insurance contributions to calculate the pension of employees in the state sector is calculated based on the average salary used as the basis for social insurance contributions in the last few years before retirement.

However, the Social Insurance Law 2024 stipulates that people who start participating in social insurance from January 1, 2025 onwards will have their average salary used as the basis for social insurance contributions for the entire period of social insurance participation calculated.

Accordingly, if employees start participating in social insurance from 2025, the pension level implemented according to the salary regime prescribed by the State will be calculated based on the entire contribution process, similar to employees implementing the salary regime decided by the employer.

Regarding this issue, speaking with VietNamNet, a representative of Hanoi Social Security said that adjusting the pension calculation method (from the average of the last 5 years to the entire period of social insurance contributions) is consistent with the salary reform policy and ensures the rights of workers.

Due to the low salary in the previous period, if the social insurance payment period is included, the pension will be very low. This is disadvantageous for workers, especially those working in the state sector.

Now that the salary level in the public sector has increased, it is appropriate to calculate the entire process according to the revised Law on Social Insurance.

“The principle of social insurance is that the benefit level is calculated based on the contribution level and the contribution period. The regulation that the pension level is calculated based on the pension rate and the average salary used as the basis for social insurance contribution during the entire contribution period is consistent with the principle of contribution and benefit,” said a representative of Hanoi Social Insurance.