Tiếng Việt
中文 (中国)
In Vietnam’s society, we often see that the price for a commodity sky-rocketing after a few years. Not just commodities, but the salary of an employee also increases with a break-neck speed. The society’s regional minimum salary is also increasing year on year, except for the last 2 years due to the Covid-19 pandemic. However, this situation leaves many people wondering, if the salary as well as other payments and contributions levels increase, does it mean that the people who works 20 years before that paid the social security contributions will not receive the same pension as the current employees today? After some research, many people find out about the term “Social Security Slippage”. So, what is Social Security Slippage in Vietnam?
Social Security Slippage in Vietnam
The term social security slippage in Vietnam refers to a coefficient, namely the coefficient of adjustment of salary and monthly income on which social insurance premiums are based.
This must be done because, the inflation rating in Vietnam is extremely high, even compared to the inflation state with the rest of the world.
It should be noted that as the world progresses and develops, there might never be a stop to inflation. However, the government’s responsibility is to control inflation, making the citizen’s life more acceptable, creating fairness between the employees with adequate working capacity and capability.
The slippage coefficient is a coefficient that helps to create a balance in the current value of money compared to the previous time. Although, in society, it’s best to never think of total fairness. Cause if the social security coefficient is 100% accurate, there would never need to be concerned about inflation and it won’t be a huge threat for governments of countries in the world anymore.
In Vietnam, slippage coefficients are often used to deal with the effects of persistent and dramatic increases in prices, normally when there is high inflation.
Each year, the Ministry of Labor, War Invalids, and Social Affairs stipulates the slippage coefficient applicable to that year. There are differences between subjects participating in compulsory social insurance and voluntary social insurance.
The salary for which social insurance premiums have been paid as a basis for calculating the average monthly salary on which social insurance premiums are based for employees shall be adjusted on the basis of the consumer price index of each period as prescribed.
This is the adjustment level to ensure the benefits for employees participating in social insurance against the devaluation of the currency.
Subjects of application of social security slippage in Vietnam
Article 1 of Circular 36/2021/TT-BLDTBXH specifically stipulates 03 groups of subjects eligible to apply the social security slippage coefficient:
- Employees who are subject to the salary regime prescribed by the State that starts participating in social insurance from January 1, 2016, onward when enjoying one-time social insurance or dying but their relatives are entitled to a one-time survivorship allowance.
- Employees who pay social insurance contributions according to the salary regime decided by the enterprise, receive a pension, a one-time allowance upon retirement, one-time social insurance or die and their relatives are entitled to a one-time survivorship allowance.
- Participants of voluntary social insurance receive a pension, a lump-sum allowance upon retirement, a lump-sum social insurance premium, or die and their relatives are entitled to a one-time survivorship allowance.
As mentioned above, every year, the Vietnam Ministry of Labor, War Invalids, and Social Affairs announces a different social security slippage coefficient for social insurance contributions. Therefore, corresponding to each year of applying for the regime, each person’s sliding payment or slippage payment will be different.
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.
|
***Other service of ASL LAW – full service Vietnam law firm *** |
||
|
|
||
|
Oversea investment consultancy for Vietnamese enterprises |
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
