Adjusting pensions for retired female workers from 2018

According to the Government's proposal, from January 1, 2018, the adjustment of the pension calculation formula in the 2014 Social Insurance Law has created a comparison between female workers and male workers, between female workers who retired later and female workers who retired before January 1, 2018.

According to the new calculation, to achieve a pension rate of 75%, female workers must have 30 years of social insurance contributions instead of 25 years as before. The new pension calculation has affected female workers who have not yet paid social insurance for 30 years.

That means, female workers are at a greater disadvantage because the Law does not stipulate a roadmap for applying the new pension calculation method for female workers, while male workers have a roadmap for gradual change over a period of 5 years.

Assuming that a female worker starts receiving pension from 2018, has exactly 25 years of social insurance contributions, then the female worker will receive pension in 2018 according to the Social Insurance Law at a rate of only 65%. Meanwhile, during the same period of insurance contributions, a female worker who retires from 2017 will receive a pension rate of 75%.

Thus, female workers retiring in 2018 have a much lower pension rate than those with the same social insurance payment period retiring in 2017 (from 1% to 10%).

Due to concerns about policy changes that made pensions for retirees in 2018 much lower than in 2017, the number of people retiring "early" in 2017 was about 10% higher than in 2016 and is considered a sudden increase.

According to forecast data from Vietnam Social Security, with the application of the pension calculation formula according to the provisions of the Social Insurance Law 2014, the number of female workers who start receiving pensions in the period from 2018 to 2021 will have a lower pension level compared to male workers.

Specifically, the number of female workers affected in 2018 was 20,500 people; 22,000 people in 2019; 23,500 people in 2020 and 25,100 people in 2021.

Therefore, the Government finds it necessary to have a solution to overcome the above limitations, minimizing the impact on female workers who start receiving pensions within the 4-year period, from January 1, 2018 to December 31, 2021.

Accordingly, the Government believes that: If the pension rate reduction roadmap is extended for 5 years from 2018 to 2022, each year, female workers will only have their pension reduced by 2% compared to the previous year. Thus, female workers who start receiving pensions in 2018 will reduce by 2%; 2019 by 4%; 2020 by 6%; 2021 by 8% and 2022 by 10%.

The Government also proposed a plan to compensate the group of female workers affected by this policy by supporting an amount equivalent to the difference in pension if calculated according to the Law on Social Insurance (10%) compared to if implemented according to the same roadmap as men. That is, it will compensate the pension rate for female workers starting to receive pension in 2018 at 8%; 2019 at 6%; 2020 at 4%; 2021 at 2% and from 2022, there will be no compensation because they will end the same roadmap as men.

According to forecast data of Vietnam Social Security, the number of female workers who start receiving pensions in the period from 2018 to 2021 and have 20 - 29 years and 6 months of social insurance payment is about 91 thousand people.

Of which, in 2018 it was 20.5 thousand people; in 2019 it was 22 thousand people; in 2020 it was 23.5 thousand people and in 2021 it was 25.1 thousand people.

According to the above adjustment plan, from 2018 to 2021, each year there will be additional funding needs. Specifically, in 2018 there will be an additional 27.8 billion VND; in 2019 it will be 23.7 billion VND; in 2020 it will be 18.1 billion VND; in 2021 it will be 10.3 billion VND.

In total, the additional amount is about 80 billion VND. The Government expects the adjusted funding source to be guaranteed by the Social Insurance Fund.

The Government recognizes that the regulation of a separate pension adjustment policy for female workers retiring from 2018 to the end of 2021 who are disadvantaged due to the impact of the 2014 Law on Social Insurance has its own characteristics, which are beyond the above-mentioned general pension adjustment and exceed the authority of the Government.

Therefore, in order to implement the above adjustment policy, the Government proposes that the National Assembly agree with the above policy and allow it to be included in the content of the National Assembly Resolution assigning the Government to issue a document implementing the pension adjustment policy for female employees who start receiving pensions from January 1, 2018 to December 31, 2021 and suffer losses due to changes in the pension calculation formula.

Examining the Government's submission, the Committee on Social Affairs proposed that the National Assembly agree with the above proposal.

The Committee on Social Affairs proposed that the National Assembly include in the Resolution of the 5th Session of the 14th National Assembly the following content: "Assign the Government to issue a document implementing the pension adjustment policy for female workers who start receiving pensions from January 1, 2018 to December 31, 2021 and are more adversely affected than male workers due to changes in pension calculation methods and the funding source for implementation is guaranteed by the Social Insurance Fund".