Retirement pensions are extremely important to help retired employees have expenses to pay for basic needs and get a free health insurance card.

Ly Hoang Minh, Deputy Head of the Retirement Desk, Department of Social Insurance Policies Implementation under the Vietnam Social Security, said that the social insurance agency currently paid nearly 2.7 million pensioners with an amount of nearly VND14.475 trillion monthly.

The current average pension is about VND5.4 million per month, which is higher than the average income of people in 2021 (VND4.2 million per month). This proved that the retirement pension provides a stable income for beneficiaries.

Retirement pension brings practical benefits for social insurance cardholders. 

The pension levels are not fixed at the time of retirement. They are periodically adjusted to increase according to the consumer price index and economic growth.

Since 1995, the Government has made 22 adjustments to pensions and in the past two years, despite the difficult economic situation due to the impact of the COVID-19 pandemic, the retirement pensions were increased 7.4 per cent from January 1, 2022.

For those who retire before January 1, 1995, after the common increase of 7.4 per cent, if their pensions are still below VND2.3 million per month, the pensions will be raised to the minimum rate of VND2.5 million.

In addition, the legal system of social insurance and health insurance is improved in line with the country's socio-economic development, ensuring the interests of participants in general and retirees in particular.

Currently, according to regulations, to enjoy retirement pensions, employees must participate in social insurance for a full 20 years. Many people who have spent a short time participating in social insurance do not accumulate enough years to be eligible for pension benefits.

Facing this situation, the Ministry of Labour, Invalids and Social Affairs is proposing to amend the 2014 Law on Social Insurance. Under the proposal, the minimum number of years of payment of social insurance to enjoy the pension will be reduced from 20 to 15 years, then to 10 years to create favourable conditions for employees who buy social insurance late. The level of support from the State budget and supplement of the maternity allowance regime are proposed to increase to better attract and create conditions for people to participate in voluntary social insurance.

The proposal aims to concretise the goals set forth by Resolution No 28-NQ/TW of the Central Party Committee and to meet the aspirations of the majority of employees who want to enjoy a pension and have health insurance in old age.

Besides pension, employees participating in social insurance when they are eligible for retirement are also granted a free health insurance card, enjoy medical examination and treatment benefits and lifelong healthcare as the health insurance fund will cover 95 per cent of medical examination and treatment costs.

In fact, the social insurance agency has paid hundreds of millions of dong, even billions of dong, for medical examination and treatment costs for pensioners suffering from serious and incurable diseases.

During the period of pension enjoyment, if pensioners die, their relatives are also entitled to a survivorship regime with many benefits.

Higher social insurance premiums for a longer time, higher pension

Under current regulations, the monthly pension is calculated by multiplying the monthly pension enjoyment rate with the average monthly salary on which social insurance premiums are based. Thus, the pension enjoyment rate is proportional to the social insurance premium payment rate and the time of payment of social insurance premiums. That is, the higher the payment of social insurance, the longer the period of payment of social insurance, the higher the pension will be.

Currently, there is still the situation in which enterprises only create payrolls with the lowest level to pay social insurance premiums for their employees. In other cases, some enterprises and employees agree to only take the salary stated in the contract as the basis for paying social insurance premiums.

“The employers intentionally circumvent the law to reduce the responsibility for paying social insurance, health insurance and unemployment insurance premiums for employees (according to regulations, the employers take responsibility to pay two-thirds of social insurance premiums for employees).

“The reduction of social insurance contributions to increase the payment that employees receive, thereby helping businesses increase competition in the labour market; or the employees themselves do not fully understand the policies and laws, do not understand the high payment of social insurance, the social insurance benefits will be high, they only care about the immediate benefits, do not pay attention to the long-term benefits, and have no sense of saving through the payment of social insurance at a young age," Minh said./.