The New Reference Rate: Effective 1st of July, a Wave of Social Insurance Benefits are Set to Soar for Employees.

What is a Reference Level?

From July 1, 2025, the Social Insurance Law (SIL) 2024 (No. 41/2024/QH15) officially takes effect, replacing the SIL 2014. One of the significant changes is the replacement of the concept of the “base salary” with a “reference level” to calculate contribution and benefit rates for social insurance schemes. Notably, the reference level directly impacts social insurance benefits such as retirement pensions, maternity, funeral, and monthly survivor’s allowances, and health recovery benefits.

Using the reference level instead of the base salary makes allowances more flexible and adaptable to economic realities, ensuring the practical value of social insurance benefits. These policies not only encourage long-term participation in social insurance but also contribute to building a multi-layered and equitable social security system, enhancing the quality of life, and promoting social stability in the context of Vietnam’s aging population.

According to Article 7 and Clause 13 of Article 141 of the Social Insurance Law 2024, which takes effect from May 1, 2025, the reference level is defined as follows:

– The reference level is a monetary amount determined by the Government and used to calculate contribution and benefit rates for certain social insurance schemes.

– The reference level is adjusted based on consumer price index increases, economic growth, and the capacity of the state budget and the social insurance fund.

– Until the base salary is abolished, the reference level is equal to the base salary. When the base salary is abolished, the reference level will not be lower than that base salary amount.

Currently, the base salary is 2,340,000 VND/month (according to Clause 2, Article 3 of Decree 73/2024/ND-CP).

The transition to the reference level will affect some social insurance benefits. Notably, from July 1, when the SIL 2024 comes into force, the reference level will significantly impact various social insurance benefits that employees should be aware of.

Minimum Retirement Pension

According to Clause 11 of Article 141 of the Social Insurance Law 2024, the following regulation is provided:

Article 141. Transitional Provisions

…

11. For subjects specified at Points a, b, c, d, dd, g, and i of Clause 1, Article 2 of this Law who participated in social insurance before this Law takes effect and have a mandatory social insurance contribution period of 20 years or more, the monthly retirement pension shall not be lower than the reference level.

…

Thus, the reference level in social insurance plays a crucial role in determining the minimum retirement pension for employees. According to the above regulation, Vietnamese citizens who participated in mandatory social insurance before July 1, 2025, and have a social insurance contribution period of 20 years or more will receive a monthly retirement pension of at least the reference level.

This means that the reference level becomes the minimum retirement pension threshold that qualified employees are entitled to, regardless of their previous social insurance contribution level.

Ensuring a minimum retirement pension of no less than 2.34 million VND/month provides employees with a basic income during retirement.

For example, an employee with 20 years of social insurance contributions and a low average salary may have received a retirement pension of less than 2.34 million VND/month. With the reference level, the minimum retirement pension will be guaranteed at 2.34 million VND/month (or higher if the reference level increases).

Allowances Calculated Based on the Reference Level

The Social Insurance Law 2024 also stipulates several allowances based on the reference level, as follows:

One-time Maternity Allowance

Based on Clause 4 of Article 58 of the Social Insurance Law 2024, the one-time allowance for each child, as specified in Clauses 1, 2, and 3 of Article 58 of the Law, is equal to twice the reference level in the month the female employee gives birth, receives the child through surrogacy, or adopts a child.

Participants in voluntary social insurance are also entitled to this benefit, with an allowance of 2 million VND/child funded by the state budget.

With the current reference level of 2.34 million VND, the one-time maternity allowance is 4.68 million VND/child (2 x 2.34 million), an increase compared to the previous amount of 3.6 million VND (2 x 1.8 million VND, based on the base salary).

For example, a female employee who gives birth in July 2025 will receive an allowance of 4.68 million VND, which is 1.08 million VND higher than the previous regulation.

Funeral Allowance

According to Clause 2 of Article 85 of the Social Insurance Law 2024, the funeral allowance is equal to ten times the reference level in the month of the employee’s death.

With the reference level of 2.34 million VND, the funeral allowance is 23.4 million VND, a significant increase compared to the previous amount of 18 million VND (10 x 1.8 million VND).

Moreover, when the reference level is adjusted upwards, the funeral allowance will increase accordingly, providing better support for the employee’s dependents.

For example, if a pensioner passes away in August 2025, the dependents will receive 23.4 million VND to cover funeral expenses.

Monthly Survivor’s Allowance

According to Clause 1 of Article 87 of the Social Insurance Law 2024, the dependents of a deceased employee are entitled to a monthly survivor’s allowance equal to 50% or 70% of the reference level, depending on their conditions (whether they have a caregiver or not).

With the reference level of 2.34 million VND: The minimum survivor’s allowance is 1.17 million VND/month (50% x 2.34 million) if there is no caregiver. If there is a caregiver, the allowance is 1.638 million VND/month (70% x 2.34 million).

Compared to the previous base salary of 1.8 million VND, the survivor’s allowance has increased from 0.9 million VND (50%) or 1.26 million VND (70%) to a higher amount, providing better support for the dependents.

For example, the dependents of a deceased employee who have a caregiver will receive 1.638 million VND/month instead of the previous amount of 1.26 million VND/month.

Health Recovery Benefits after Sick Leave or Maternity Leave

According to Clause 3 of Article 60 of the Social Insurance Law 2024, the benefit for one day of health recovery after maternity leave is equal to 30% of the reference level, effective from May 1, 2025.

With the reference level of 2.34 million VND, the health recovery allowance is 702,000 VND/day (30% x 2.34 million), an increase compared to the previous amount of 540,000 VND/day (30% x 1.8 million).

The new regulation also allows for calculating sick leave benefits for half-day absences (equal to half of the one-day benefit), providing more flexibility for employees.

For example, a female employee on a five-day health recovery break after maternity leave will receive 3.51 million VND (5 x 702,000 VND), which is 0.81 million VND higher than the previous regulation (5 x 540,000 VND).

Work Injury and Occupational Disease Benefits

New Regulation: According to the Labor Safety and Hygiene Law 2015 and the Social Insurance Law 2024, the one-time allowance for employees with work-related injuries or occupational diseases (with a capacity loss of 5% to 30%) is calculated based on the reference level.

Allowance = 5 x Reference Level + (Capacity Loss % – 5) x 0.5 x Reference Level.

With the reference level of 2.34 million VND:

+ 5% capacity loss: The allowance is 11.7 million VND (5 x 2.34 million), an increase compared to the previous amount of 9 million VND (5 x 1.8 million).

+ For each additional 1% capacity loss: The allowance increases by 1.17 million VND (0.5 x 2.34 million), higher than the previous increase of 0.27 million VND (0.5 x 1.8 million).

For example, an employee with a 10% capacity loss will receive 14.55 million VND (5 x 2.34 million + 5 x 0.5 x 2.34 million), which is 2.25 million VND higher than the previous regulation.