The New Pension Calculation: Understanding the Salary Reform from July 1st Onwards

At a press conference on the proposed agenda for the 7th session of the 15th National Assembly on May 19, the media asked questions regarding the impact of salary reform on pension calculations under the amended Social Insurance Law.

Vice Chairman of the Social Affairs Committee Lam Van Doan stated that the Social Insurance Law is a complex and challenging piece of legislation, affecting a large number of workers and retirees. The Social Affairs Committee, National Assembly leaders, and the National Assembly Standing Committee have sought feedback from those who will be impacted by the law, especially regarding the issue of one-time insurance withdrawals.

The Social Insurance Law impacts a large number of workers. Photo: Duc Thanh

Regarding the timing of the law’s passage, Mr. Doan informed that the Social Affairs Committee aims to present it to the National Assembly for approval during the 7th session. However, the actual passage of the law will depend on the discussions and decisions made by the National Assembly delegates in the assembly hall.

Currently, the relevant documents and materials have been submitted to the National Assembly leaders for their review and signature before presenting them to the National Assembly.

The Vice Chairman of the Social Affairs Committee emphasized that the basis for social insurance contributions and the average social insurance contribution amount are directly linked to salary reform. The government has already submitted a report on this matter to the National Assembly and the National Assembly Standing Committee.

“We base our proposals on the government’s recommendations to adjust social insurance contribution rates in a way that ensures optimal benefits for workers before and after salary reform,” said Mr. Doan. “We aim to minimize any discrepancies between those who will receive the new salaries and those who retired before July 1, 2024.”

Vice Chairman of the Social Affairs Committee, Lam Van Doan. Photo: National Assembly

However, Mr. Doan also noted that this is a challenging issue that requires careful consideration. The committee is coordinating with relevant agencies to continue studying and proposing the best option to the National Assembly to ensure the protection of workers’ rights.

Replacing the base salary with a reference salary

Regarding the reference salary, Mr. Doan explained that Resolution 28 of the 12th Central Committee on Social Insurance Policy Reform stipulates that the base salary should be abolished when implementing salary reform. This base salary has been the basis for calculating pensions and social policies for workers, as well as various other policies.

Therefore, from July 1, 2024, according to Resolution 28, the base salary will be replaced by a new reference salary.

“The government agencies are working on calculating an appropriate reference salary to ensure that it is not lower than the current base salary,” said the Vice Chairman of the Social Affairs Committee. He added that the National Assembly’s agencies are also evaluating and considering this matter.

“The calculation of the reference salary and the specific multiplier, along with salary reform, for application in the following years, needs to be carefully and scientifically considered,” asserted Mr. Doan. “We aim to ensure that retirees and current workers receive optimal benefits after the law is enacted.”