Changes in employees' pension benefits in 2022 in Vietnam, The problem about pension policy in Vietnam, Changes in employees' pension benefits in Vietnam, Changes in employees' pension benefits 

Changes in employees’ pension benefits in 2022 in Vietnam

To improve the citizens’ lives after retirement, and to help the elderly better deal with the impacts of the Covid-19 pandemic, the Government has just issued Decree 108/2021/ND-CP dated December 7, 2021, regulating pensions, social insurance benefits, and monthly allowances.

The Decree clearly states the adjustment of pension, social insurance allowance, and monthly allowance for beneficiaries of pension, social insurance allowance, and monthly allowance from 2022.

The problem about pension policy in Vietnam

The social insurance regime for those who worked and retired before 1995 does not completely apply the principle of contribution-benefit in Vietnam.

Nonetheless, over the years, the problem about pension policy in Vietnam and the need to overcome the gap between pensions of people who retired before and after 1995 has been gradually solved by the Government.

In the period 2003-2007, the Government has adjusted pension 6 times with an increase from 164.8 % to 228.8% depending on salary level, salary coefficient before retirement, and retirement age. In which, those who retired before September 1985 and before April 1993 were adjusted to a higher rate.

Particularly in the period from 2008 to now, the Government has adjusted monthly pension and social insurance allowance 12 times.

Changes in employees' pension benefits in 2022 in Vietnam
Changes in employees’ pension benefits in 2022 in Vietnam

Nevertheless, the changes were insufficient. Furthermore, for the past two years, pensioners have not received a raise. In March and August 2021, the Ministry of Labour, Invalids, and Social Affairs twice proposed increases of 15% and 11% respectively, but the proposal wasn’t passed through.

Accordingly, the difference between pensions was further demonstrated as the Covid-19 pandemic rages on in Vietnam, targeting the retirees, making them vulnerable to the virus without financial backup.

Changes in employees’ pension benefits 

Acknowledging the difficulties of the people, the Government has decided to further aid the retired employees by increasing the pensions, social allowances, and monthly allowances of low pensioners and retirees before 1995 by 7.4%.

Decree 108 adjusting pensions, social insurance benefits, and monthly allowances from the beginning of 2022 is issued on the basis of the proposal of the Ministry of Labor, Invalids and Social Affairs.

The Decree clarifies that, after making the adjustment according to the general level, those who retire before 1995 that have a pension, social insurance allowance, and monthly allowance of less than 2,500,000 VND/month will be further adjusted at the following rate:

  • From January 1, 2022, the pension, social insurance allowance, and monthly allowance of December 2021 will be increased by 7.4% for the subjects specified in Clause 1, Article 1 Decree 108.
  • From January 1, 2022, provide an additional 200,000 VND/person/month for those with a pension or insurance allowance social insurance, monthly allowance of 2,300,000 VND/person/month or less; increase to 2,500,000 VND/person/month for those with a pension, social insurance allowance, monthly allowance from 2,300,000 VND/person/month to less than 2,500,000 VND/person/month.

The adjusted pension, social insurance allowance, and monthly allowance shall be the basis for calculating the adjustment of pension and allowance in subsequent adjustments.

Decree 108/2021/ND-CP takes effect from January 20, 2022. The provisions of this Decree shall be effective from January 1, 2022.

Funding sources for increasing pensions and subsidies come from the state budget and the Social Insurance Fund. The total adjustment budget is expected to be about 12,650 billion VND, of which the additional state budget for retirees before 1995 is 3,648 billion VND.

ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.

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