Change in the way public sector pensions are calculated from January 1, 2025

The Social Insurance Law 2024, recently passed by the National Assembly, maintains the roadmap for calculating the average salary as the basis for social insurance contributions to receive pensions and one-time benefits for employees in enterprises. That is the average of the entire contribution process.

For public sector workers, the average is 5 - 20 years for those joining the system depending on the time. For those paying social insurance from January 1, 2025 onwards, the average is calculated for the entire payment period.

Specifically:

For employees participating in social insurance in both areas, the average salary will be used as the basis for the joint contribution of the two periods. The Government will specify this content and the average salary used as the basis for contribution in some special cases.

An expert in the field of labor and wages said that adjusting the way pensions are calculated (from the average of the last 5 years to including the entire period of social insurance contributions) is in line with the policy of wage reform and ensures the rights of workers.

“The previous salary was low, if we include the entire period of social insurance contributions, the pension will be very low. This is disadvantageous for workers. Therefore, the Social Insurance Law with a gradual increase is appropriate, ensuring the rights of workers in the public sector. Now that the salary in the public sector has been raised, it is appropriate to include the entire period,” said this expert.

The Ministry of Labor, War Invalids and Social Affairs said that one of the principles 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 for the entire contribution period is consistent with the above principle.

According to statistics from Vietnam Social Security, the average salary for social insurance contributions of employees in the administrative, career, and party organization groups is 6.936 million VND, and that of employees in the enterprise and cooperative groups is 6.382 million VND. The difference in salary contributions between the two groups is about 9%.

As of December 2023, there are 1.27 million pensioners (retiring and receiving a state salary). The average pension of this group is 6.1 million VND/month.

In both the public and private sectors, pensioners from the Social Security Fund receive an average of 5.6 million VND/person/month.