Health check for the elderly in Hanoi. Photo: Anh Dung
Accordingly, the Ministry of Labor, War Invalids and Social Affairs will propose the minimum pension increase by 15% compared to the salary of civil servants and officials, which will increase by 23.5%.
Two proposed increase rates
Resolution No. 104/2023 of the National Assembly on the state budget estimates for 2024 states that from July 1, 2024, the comprehensive reform of salary policy will be implemented according to Resolution No. 27 dated May 21, 2018 of the 7th Central Executive Committee Session of the 12th term; adjust pensions, social insurance benefits (SI), monthly benefits, preferential benefits for people with merits, and some social security policies that are linked to basic salaries. Regarding the comprehensive reform of salary policy according to Resolution No. 27-NQ / TW, Minister of Labor, War Invalids and Social Affairs Dao Ngoc Dung believed that salary reform must go hand in hand with pension policy adjustments in a balanced and harmonious manner, ensuring that retirees do not face difficulties and disadvantages after the reform.
“If the salary of civil servants and officials increases by 23.5%, then the minimum pension must increase by at least 15%. When implementing salary reform, retired workers before 1995 will enjoy the highest level of benefits, ensuring that they are not disadvantaged. For people with merits, after salary reform, they will receive higher benefits than the average,” said Mr. Dung.
Regarding opinions on the proposal to adjust pensions, SI benefits and monthly benefits for 2024, the Vietnam Social Security proposes to increase pensions by about 8% from July 1. Explaining this proposal, Vietnam Social Security said that with the calculation of the average salary paid for SI to calculate pensions, one-time benefits according to the proposal, the average 5-year pension of workers would increase by about 1.5% (excluding the exchange rate factor), and the pension of retirees after July 1, 2024 would only increase by about 0.13% compared to retirees in June 2024.
In fact, the salary adjustment in 2004 and 2005 was only about 10%, and considering the factor of pension adjustment and economic growth in 2023 (according to the provisions of Article 57 of the 2014 Social Insurance Law), Vietnam Social Security proposed a pension adjustment of about 8% from July 1, 2024, which is appropriate. Along with that, based on the increase of the consumer price index in 2023 at 3.25% and the economic growth at 5.05% in 2023. This proposed increase will help reduce the gap between pre-reform pension recipients and those after July 1, 2024.
What pension amount is enough for retirees to live on?
As a person with a relatively high pension (about VND 8 million/month), Mr. Nguyen Van The, a retired official in Cau Giay district, Hanoi, said that if there is no support from children, this pension amount is not enough to cover daily living expenses as well as healthcare.
“Being retired means being old and elderly people often visit hospitals frequently. Going to the hospital, even with health insurance, still incurs additional costs outside of health insurance. There are months when the cost of medical examination and treatment exceeds one month’s salary. Many retirees only receive a pension of VND 3 million per month. How can this pension amount guarantee a minimum standard of living for retirees?” said Mr. The.
So how much should the pension increase be? Deputy Minister of Labor, War Invalids and Social Affairs Pham Minh Huan believes that each side’s opinion has its basis. The Ministry of Labor, War Invalids and Social Affairs wants a higher increase because pensions are low; Vietnam Social Security implements according to Article 57 of the 2014 Social Insurance Law.
“The 2014 Social Insurance Law stipulates that pension adjustment should be based on the increase rate of the consumer price index and economic growth that is suitable for the state budget and the social insurance fund, but from the past to now, pension adjustments have always been equal to or higher than the salary increase rate of civil servants and officials. Therefore, when civil servants and officials have a higher salary increase rate, retirees also need to have a high pension increase,” explained Mr. Huan.
Together with salary reform, pension adjustment is one of the topics that always receives attention from society. Increasing pensions will help reduce the gap between pension recipients before and after salary reform, as well as improve the lives of retirees. In reality, many pension recipients are receiving pensions lower than the minimum wage in Zone 1 (currently VND 4.68 million/person/month). Therefore, after retirement, many people still have to find jobs to ensure their livelihoods.
After many years of studying social welfare policies, Dr. Nguyen Huu Dung – former Director of the Institute of Labor and Social Research, Ministry of Labor, War Invalids and Social Affairs said that in principle, the pension increase from July 1, 2024, must be based on the lowest salary of civil servants and officials but also take into account the capacity of the budget and the social insurance fund. The lowest pension is equal to the basic salary, currently VND 1,800,000. In the coming time, when salary reform is implemented, the basic salary will be eliminated, so according to the trend, the lowest pension should be equal to the average minimum wage in 4 zones. Therefore, when the salary increase rate for civil servants and officials is 23.5%, the proposed pension increase of 15% is appropriate.
