What’s in Store for Retirement Benefits Starting July 1st?

Details on Pension Payment Timing

The Ministry of Home Affairs is drafting a circular to provide detailed guidance on the timing of pension payments, eligibility determination, and the process for resolving retirement benefit claims under Article 101, Clause 4 of the Social Insurance Law.

The draft circular outlines specific scenarios and adheres closely to the provisions of the Social Insurance Law to determine the pension payment timing for voluntary social insurance participants who meet the retirement benefit eligibility criteria outlined in Articles 98 and 141, Clause 9 of the Law.

The proposed timing for pension payments is the first day of the month, starting from the first month after the participant has fulfilled the eligibility requirements for retirement benefits.

According to Article 3 of the draft circular, the timing of pension payments for voluntary social insurance participants is governed by Article 101 of the Social Insurance Law and is detailed as follows:

First, for participants with at least 15 years of social insurance contributions, the pension payment timing is calculated from the first day of the month following the month in which they reach the retirement age specified in Clause 2, Article 169 of the Labor Code.

Second, if a participant continues to make voluntary social insurance contributions after becoming eligible for a pension, the pension payment timing will be the first day of the month following the month in which they stop contributing and submit a pension claim.

Third, for participants who choose to make a one-time payment for the remaining years as per point e, Clause 2, Article 36 of the Social Insurance Law, the pension payment timing, as stipulated in Article 98 of the Law, will be the first day of the month after the full payment for the remaining years has been made.

Fourth, for participants who joined the voluntary social insurance scheme before January 1, 2021, and have contributed for at least 20 years, the pension payment timing is calculated from the first day of the month following the month in which they turn 60 years old for men and 55 years old for women, unless they opt for an earlier pension under Article 98 of the Social Insurance Law.

Fifth, if the pension payment timing, as determined by the first four clauses, falls before July 1, 2025, the actual payment will commence on July 1, 2025.

Sixth, when the exact date and month of birth are unknown (only the year of birth is known), the pension payment timing will be calculated from the first day of the month following the month in which the participant fulfills the eligibility requirements. In this case, the retirement age is determined based on January 1st of the participant’s birth year.

Proposing Two Pension Payment Schemes

The draft circular also presents two schemes for pension eligibility from July 1, when the new Social Insurance Law takes effect.

According to the Ministry of Home Affairs, for participants who have been contributing to voluntary social insurance under the following payment frequencies: every 3 months, every 6 months, every 12 months, or a one-time payment for subsequent years as outlined in points b, c, d, and point đ, Clause 2, Article 36 of the Social Insurance Law, the conditions for assessing the contribution period are as follows:

Scheme 1: The last month of the chosen payment frequency, regardless of whether the participant has already met the age and contribution period requirements.

Scheme 2: The month in which the participant meets the age requirement and submits a pension claim.

The Ministry of Home Affairs further elaborates that Scheme 2 gives rise to two scenarios: recording the contribution period up to the point of the pension request and refunding subsequent months’ contributions, or recording the entire contribution period up to the end of the chosen payment frequency.