Average pension trends and adjustments

At a press briefing on January 14, Do Ngoc Tho, Head of the Policy Implementation Department at Vietnam Social Security (VSS), revealed that nearly 3.4 million people across the country are currently receiving retirement and social insurance benefits.

By the end of 2024, the nationwide average pension, including those for armed forces personnel, stood at approximately 7 million VND per month. However, the average pension for civilians was somewhat lower.

This average pension exceeds the per capita income of 5.4 million VND per month, as reported in a preliminary survey on living standards for 2024 by the General Statistics Office. The survey noted an 8.8% increase in per capita income compared to 2023.

Pensions have been regularly adjusted. Most recently, starting July 1, 2024, the government increased pensions and monthly social insurance allowances by 15% over the rates from June 2024.

According to the Ministry of Labor, Invalids, and Social Affairs, over the past decade (2013–2023), the government has adjusted pensions seven times, with an average increase of over 8.43%. These adjustments consistently outpaced inflation during the same period.

The July 1, 2024, 15% increase is double the average adjustment rate of the previous decade.

Persistent disparities in pension levels

Despite the higher average pension, many retirees still receive relatively low payments, particularly those who retired before 1995. For these individuals, even with the 15% increase from July 2024, pension amounts remain modest.

To address these disparities, the 2024 Social Insurance Law, effective from July 1, 2025, will further increase pensions for individuals with lower payouts, especially those who retired before 1995. The law aims to narrow the pension gap across retirement periods.

Currently, most retirees receive pensions ranging between 5 and 6 million VND per month, despite the national average being higher.

Structural challenges in pension adjustments

A labor and wage expert highlighted that pensions are calculated based on contribution levels, contribution periods, and a sharing principle among participants. However, current policies fail to fully uphold the principle of "sharing among social insurance participants."

Annual pension adjustments are percentage-based and indexed to inflation. While this system has minimal impact on retirees with high pensions, it significantly benefits those with lower pensions.

"For instance, the recent 15% adjustment resulted in retirees with higher pensions receiving increases of several million or even tens of millions of VND, whereas those with lower pensions saw only a few hundred thousand VND added," the expert explained.

The expert advocated for a recalibration of the adjustment mechanism to ensure greater equity. Higher adjustment rates should be applied to lower pensions, while those with higher pensions should receive smaller increases. This would better reflect the sharing principle of the social insurance system.

Vu Diep