Starting January 1, 2025, pension calculations for state-sector employees will be based on their entire social insurance contribution period rather than just the final years of employment, as per the current regulations.

The Ministry of Labor, Invalids, and Social Affairs (now the Ministry of Home Affairs) is proposing adjustments to pension and retirement benefits policies as outlined in the 2024 Social Insurance Law.

Under this law, which takes effect on July 1, 2025, the minimum required years of social insurance contributions for pension eligibility will be reduced from 20 years to 15 years. To receive a pension, employees must have contributed to social insurance for at least 15 years and reached the statutory retirement age.

To implement the new law, the ministry is drafting guidelines, which maintain the current method of pension calculation for state-sector employees.

New pension calculation method for the state sector

The average monthly salary used for pension calculation in the state sector will now be determined based on the employee’s entire social insurance contribution period. Previously, the calculation was based on 5 to 20 years of earnings before retirement, depending on when the employee joined the social insurance system.

According to Article 62 of the 2024 Social Insurance Law, pension calculations will follow this timeline:

Employees who joined before January 1, 1995: pension based on the last 5 years of salary.

Employees who joined between 1995 and 2000: based on the last 6 years.

Employees who joined between 2001 and 2006: based on the last 8 years.

Employees who joined between 2007 and 2015: based on the last 10 years.

Employees who joined between 2016 and 2019: based on the last 15 years.

Employees who joined between 2020 and 2024: based on the last 20 years.

Employees who join from January 1, 2025, onward: pension based on their entire contribution period.

For employees with mixed contributions (both under the state-regulated salary system and private-sector salaries), their pension will be calculated using an average of both contribution periods.

Ensuring sustainable pensions

From January 1, 2025, state-sector employees will have their pensions calculated in the same way as those in the private sector.

For female workers, a 15-year contribution qualifies them for 45% of their average salary used for social insurance contributions, increasing by 2% per additional year up to a maximum of 75%.

For male workers, a 15-year contribution qualifies them for 40%, increasing by 1% per year for the next five years. From the 20th year onward, they receive 45%, with a 2% increase per additional year up to a maximum of 75%.

To receive the maximum 75% pension, women must contribute for 30 years, while men must contribute for 35 years.

Employees who retire before the statutory age will have their pension reduced by 2% per year. If they retire 6 to 12 months early, the reduction is 1%, and there is no reduction for those retiring less than 6 months early.

Balancing fairness and pension security

According to Hanoi Social Insurance representatives, the shift to calculating pensions based on the full contribution period aligns with wage reform policies and ensures workers' long-term benefits.

Previously, state-sector salaries were relatively low, meaning that a full-period calculation would have resulted in lower pensions. However, as public sector salaries have gradually increased, this method now provides a fairer approach in line with national salary reforms.

A labor and wage policy expert noted that the equalization of pension calculations between the public and private sectors reflects the narrowing wage gap. With ongoing government efforts to streamline administrative structures and enhance efficiency, public-sector salaries are expected to continue rising, ensuring sustainable pensions for retirees.

Vu Diep