A representative from Vietnam Social Insurance stated that the current pension calculation follows the Social Insurance Law 2014.

Workers eligible for retirement, having contributed to social insurance for at least 20 years as stipulated in Article 54, have their monthly pension calculated as follows:

The pension amount equals 45% of the average monthly salary used for social insurance contributions, corresponding to 15 years of contributions. An additional 2% is added for each subsequent year, up to a maximum of 75%.

For early retirement, a reduction of 2% is applied for each year retired earlier than the stipulated age. If the retirement age is short by up to six months, the reduction is 1%; beyond six months, no further percentage reduction applies.

From July 1, 2025, the minimum required social insurance contribution period to receive a monthly pension will be reduced from 20 years to 15 years, prompting changes in the pension calculation.

New calculation method:

Male workers with 15 to under 20 years of social insurance contributions will receive 40% of the average monthly salary used for contributions, corresponding to 15 years of contributions. Each additional year adds 1%.

A labor and wage expert noted that reducing the required contribution period to 15 years, compared to the current 20 years, will allow more workers to receive pensions in their old age.

Although pensions for 15 years of contributions may be lower, retirees benefit from annual adjustments and free health insurance, easing financial burdens during illness or old age.

Pension based on entire contribution period

Starting July 1, 2025, the calculation for pensions in the public sector will shift to averaging the salaries for the entire contribution period instead of the most recent years, depending on when contributions began:

Contributions before January 1, 1995: average of the last 5 years before retirement.
Contributions from January 1, 1995, to December 31, 2000: average of the last 6 years.
Contributions from January 1, 2001, to December 31, 2006: average of the last 8 years.
Contributions from January 1, 2007, to December 31, 2015: average of the last 10 years.
Contributions from January 1, 2016, to December 31, 2019: average of the last 15 years.
Contributions from January 1, 2020, to December 31, 2024: average of the last 20 years.
Contributions starting January 1, 2025: average of the entire contribution period.

Similar changes apply to private-sector workers.

A Hanoi Social Insurance representative emphasized that transitioning from averaging the last years to the entire contribution period aligns with wage reform policies and ensures workers' rights.

However, since salaries in earlier periods were generally lower, pensions calculated over the entire contribution period might result in lower amounts, particularly for public-sector workers. As public-sector salaries have increased, the revised method is now more appropriate.

According to the Ministry of Labor, Invalids, and Social Affairs, one principle of social insurance is to calculate benefits based on contributions and duration. Thus, determining pensions based on the average salary over the entire contribution period aligns with the principle of "contribution and benefit."

As of December 2023, 1.27 million retirees (whose pensions are based on state salaries) receive an average monthly pension of 6.1 million VND.

Overall, retirees from both public and private sectors receive an average pension of 5.6 million VND per month from the social insurance fund.

Vu Diep