Seniors Receiving Low Pensions Will Get a Fair Increase Starting July 1, 2025

Article 67 of the Amended Social Insurance Law, which will take effect on July 1, 2025, stipulates that retirement pensions shall be adjusted based on the consumer price index, taking into account the State budget and Social Insurance Fund capabilities.

Additionally, the law introduces a reasonable pension increase for retirees with low pensions and those who retired before 1995, aiming to narrow the pension gap between retirees from different periods.

The law also clarifies that the Government will decide on the timing, subjects, and amount of pension adjustments.

To implement this regulation, the State will annually transfer funds from the budget to the Social Insurance Fund to ensure sufficient pension and social insurance benefits for those who retired or received social insurance benefits before January 1, 1995.

According to the Ministry of Labour, Invalids and Social Affairs, the adjustment of pension increases for retirees with low pensions and those who retired before 1995 is to institutionalize Resolution No. 28 of the 7th Conference of the 12th Central Committee of the Communist Party of Vietnam on reforming social insurance policies.

Specifically, this involves synchronously implementing reform contents to expand social insurance coverage, aiming for universal social insurance. At the same time, ensuring long-term balance of the Social Insurance Fund, adjusting pensions relatively independently in relation to the salaries of working people, and changing the way pensions are adjusted towards a sharing approach.

Furthermore, Resolution No. 28 emphasizes the need to amend the pension calculation method to reduce the accumulation ratio, ensuring the balance of the Retirement Fund in the long run, in line with international practices.

In accordance with Resolution No. 28, the Government has issued Decree No. 75/2024 on adjusting retirement pensions, social insurance allowances, and monthly allowances. This decree increases pensions, social insurance allowances, and monthly allowances by 15% for eligible individuals. Additionally, those with benefits below VND 3.5 million/month will be adjusted to reach this amount.

Another new regulation in the Amended Social Insurance Law is the provision on the pension ratio for male and female workers with 15 years of social insurance contributions. Male workers with 15 years of contributions will have their pension ratio adjusted to 40%. For each additional contribution year, the ratio will increase by 1%. Female workers with the same contribution period will receive a higher ratio of 45%. To reach a 45% ratio, male workers will need 20 contribution years.

For both male and female workers, after reaching a 45% pension ratio, each additional contribution year will result in a 2% increase, up to a maximum of 75%. However, female workers need to contribute for at least 30 years, while male workers need a minimum of 35 years to achieve this maximum ratio.

According to the Ministry of Labour, Invalids and Social Affairs, the Amended Social Insurance Law does not adjust the difference in pension ratios between men and women but instead adds the ratio for male workers with less than 20 years of social insurance contributions to align with the balance of the Social Insurance Fund.

With these regulations, there is a 5% difference in pension ratios between male and female workers with 15 years of contributions. This gap widens to 10% when contributions reach 20 years.