Proposal to increase pension by 8%

The increase is based on a 3.35% consumer price index and a GDP of 5.05% in 2023, as stated by the Vietnam Social Security in its report on the impact of implementing the new salary on social insurance policies. The 8% increase will also reduce the gap in benefits between retirees before and after the salary reform.

If approved, the State Budget is expected to allocate an additional VND1,900 billion in the last 6 months of the year; an additional VND50 billion if the benefit level is adjusted to VND3.5 million per month for those who retired before 1995. The Social Insurance Fund will increase by about VND6,900 billion, excluding health insurance contributions.

Vietnam Social Security calculates that in the next 5 years, if pensions and benefits are calculated based on the average salary paid for social insurance during the entire period of participation in the system, the pension level of workers will only increase by about 5% excluding inflation. The pension of those retiring after July 1, 2024 will also only increase by 0.13% compared to those retiring before June 2024.

Statistics by the end of 2023 show that the average salary for social insurance contributions of public sector employees is currently 6.9 million VND with a pension of about 6.1 million VND. The salary used as the basis for calculating social insurance contributions of employees in enterprises and cooperatives is nearly 6.4 million VND.

From mid-2024, cadres, civil servants, and public employees will be paid according to their job position instead of the current equalization coefficient. It is expected that from 2025, salaries of cadres, civil servants, public employees, and armed forces will continue to increase by an average of 7% per year until the lowest salary in the public sector is equal to or higher than the lowest salary in region 1 of the business sector (the current minimum salary in region 1 is 4.68 million VND).

By the end of 2022, Vietnam will have about 14.4 million people over retirement age, but only 3.3 million will receive monthly pensions and social insurance benefits from the Social Insurance Fund, and 1.8 million will receive social pension benefits from the state budget. Vietnamese people will receive a maximum pension of 75%, but their salary for insurance contributions is low, so the average pension is only 5.4 million VND.