More options for workers to receive higher pensions

According to the provisions of the Law on Social Insurance (SI) 2024, effective from July 1, 2025, employees who want a higher pension can participate in supplementary pension insurance.

Because the Law on Social Insurance stipulates that the ceiling for compulsory social insurance contributions does not exceed 20 times the basic monthly salary, individuals who want a higher pension can access the supplementary pension insurance channel.

A representative of the Ministry of Labor, War Invalids and Social Affairs said that supplementary pension insurance is a type of voluntary insurance based on market principles; supplementing the pension regime in compulsory social insurance.

The subjects participating in supplementary pension insurance are employers and employees. The level of supplementary pension insurance contribution is voluntarily agreed upon by employers and employees.

The Supplementary Pension Insurance Fund is a financial fund independent of the state budget, which is accounted for, accounted for, prepared for financial statements, and audited in accordance with the provisions of the law on accounting and the law on auditing. Contributions to the Supplementary Pension Insurance Fund are managed according to each individual pension account.

The supplementary pension fund is used to pay supplementary pension benefits to employees, organizational costs and management activities.

The level of supplementary pension insurance payment is determined based on the balance of the individual pension account at the time of payment, accumulated through investment activities of the supplementary pension insurance fund according to market principles.

According to the license of the Ministry of Finance, there are 4 fund management companies that are certified to be qualified to operate the Voluntary Supplemental Pension Fund management business, including: Dragon Capital Vietnam Fund Management Company, MB Investment Fund Management Company, SSI Fund Management Company, Vietcombank Fund Management Company.

Receive monthly payments for at least 10 years

Supplementary pension insurance was introduced in 2018 to provide employers and employees with more options to contribute to receive a higher pension.

Decree No. 88/2016 of the Government on the voluntary supplementary pension program stipulates: The amount of payment from the personal pension account depends on the value of the personal pension account, the payment plan specified in the pension fund participation contract, and the agreement between the employee and the employer on participation in the pension fund.

Fund participants receiving payments from their individual retirement accounts can choose to receive payments on a monthly or lump-sum basis. The State encourages monthly payments.

Retirement fund participants will receive monthly payments for a minimum of 10 years. The monthly payment level is chosen by the recipient but cannot exceed the total value of the individual retirement account at the time of retirement divided by 120 months. After 10 years, the individual retirement fund participant can receive a lump sum payment.

Thus, from July 1, 2025, with participation in supplementary pension insurance, employees will have more options to receive a higher pension when they reach retirement age.

Former Deputy Minister of Labor, War Invalids and Social Affairs Pham Minh Huan said that the management of supplementary pension insurance is completely different from that of Vietnam Social Security. This is a company that manages investment trust funds, and the money of participants in this fund must be guaranteed to be safe and generate more profit.

“Compulsory social insurance can only contribute to a certain level, while those who have money and want to contribute to get a higher level of benefits can participate in voluntary supplementary pension insurance. Participants contribute to this fund to invest, and the profit is added and withdrawn according to their personal accounts,” said Mr. Huan.