Many people will benefit from the new pension calculation method.

Representatives from Vietnam Social Security stated that the current pension calculation method is based on the 2014 Social Insurance Law. Accordingly, the monthly pension amount for employees who meet the retirement age requirements and have contributed to social insurance for at least 20 years (as stipulated in Article 54 of this Law) is calculated as follows:

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

In the case of employees eligible for early retirement, the pension is reduced by 2% for each year of early retirement. If the retirement age has a fractional period of up to 6 months, the reduction is 1%; if it is more than 6 months, there is no percentage reduction for early retirement.

However, from July 1, 2025, the regulation on the minimum number of years of social insurance contributions required to receive a monthly pension will be reduced from 20 years to only 15 years, so the pension calculation method will also change.

Specifically, since workers who have participated in social insurance for 15 years are already entitled to a pension, the law adds a method for calculating the pension amount.

Male workers with 15 to less than 20 years of social insurance contributions will receive a monthly pension equal to 40% of the average salary used as the basis for social insurance contributions, for 15 years of contributions, and an additional 1% for each additional year of contribution.

According to a labor and wage expert, calculating the social insurance contribution period at only 15 years instead of 20 years as in the current Social Insurance Law will allow more workers to receive pensions in their old age.

Although the benefit level for 15 years of social insurance contributions is low, in addition to annual pension adjustments, retirees also receive free health insurance. This is an important condition to reduce the financial burden of illness and disease in old age.

Pensions are calculated based on the entire period of participation in social insurance.

Also, from July 1, 2025, the method of calculating pensions based on the average monthly salary used for social insurance contributions in the state sector will change according to the new regulations of the new Social Insurance Law.

For those who participated in social insurance before January 1, 1995, the average monthly salary used for social insurance contributions is calculated based on the last 5 years before retirement; for those who participated in social insurance from January 1, 1995 to December 31, 2000, the average monthly salary used for social insurance contributions is calculated based on the last 6 years before retirement.

For workers who participated in social insurance from January 1, 2001 to December 31, 2006, the average monthly salary used for social insurance contributions will be calculated based on the last 8 years before retirement; for those who participated in social insurance from January 1, 2007 to December 31, 2015, the average monthly salary used for social insurance contributions will be calculated based on the last 10 years before retirement.

For those who participated in social insurance from January 1, 2016 to December 31, 2019, the average monthly salary used for social insurance contributions will be calculated based on the last 15 years before retirement; for those who participated in social insurance from January 1, 2020 to December 31, 2024, the average monthly salary used for social insurance contributions will be calculated based on the last 20 years before retirement.

For those participating in social insurance from January 1, 2025 onwards, the average monthly salary used for social insurance contributions will be calculated based on the entire period of participation. Similarly, in the business sector, for those contributing to social insurance from January 1, 2025 onwards, the average salary will also be calculated based on the entire contribution period.

Representatives from the Hanoi Social Insurance agency stated that adjusting the method of calculating pension benefits (from calculating the average of the last 5 years to calculating the entire social insurance contribution period) is consistent with the salary reform policy and ensures the rights of workers.

Due to low previous salaries, if the entire period of social insurance contributions is taken into account, the pension will be very low. This is disadvantageous for workers, especially those working in the public sector.

Now that salaries in the public sector have increased, calculating the entire working life according to the amended Social Insurance Law is appropriate.

According to the Ministry of Labour, Invalids and Social Affairs, one of the principles of social insurance is that the benefit level is calculated based on the contribution level and the contribution period. The regulation that pension levels are calculated based on the pension benefit rate and the average salary used as the basis for social insurance contributions throughout the entire contribution period is consistent with the principle of contribution and benefit.

As of December 2023, there were 1.27 million people receiving pensions (receiving a state-funded pension upon retirement). The average pension for this group was 6.1 million VND per month.

Across both the public and private sectors, the average pension received from the social insurance fund is 5.6 million VND per person per month.