The MOLISA is collecting suggestions on increasing pensions, social insurance and monthly allowances for 8 target groups. Accordingly, with the adjustment plan from July 1, 2021, the expected increase is 10% and will rise to 15% from January 1, 2022.

Giving an explanation on this proposal, Mr. Nguyen Huy Hung - Director General of the Deparment of Industrial Relations and Wage (MOLISA), said: According to statistics, the per capita income of Vietnam in 2020 is 3,521 USD/person/year (equivalent to 6.7 million VND/month); in 2021, it is estimated at 3,700 USD/person/year (equivalent to 7 million VND/month). The minimum wage level in the region in 2021 is 3.71 million VND/month on average. The poverty standard for the period 2022-2025 is below 2 million VND/month in urban areas and less than 1.5 million VND/month in rural areas. Therefore, the rate of 2.5 million VND/month is 36% of the average income per capita in 2021 and 67.4% of the regional minimum wage. Thus, the proposed rate increases by 15% to ensure price slippage compensation in order to maintain the value of the beneficiary's pension and allowances, due to the impact of inflation and partly the results of economic development 3 years ago and since adjustments to pensions and social insurance allowances have not been made in 2020 and 2021.

According to Mr. Pham Minh Huan - former Deputy Minister of MOLISA, the progress of wage reform is quite delayed since there have been complex issues that cannot be simultaneously solved. Previously, whenever the base salary was increased, the pension had also been increased, but the increasing plan of the base salary from July 1, 2020 had to be temporarily delayed. It is reasonable to separate pensions, but how to make people less shocked and mentally ill is what matters. Therefore, the implementation of the wage reform needs consideration, and also the roadmap needs to have a specific and harmonious calculation based on the price slippage index as well as the economic development rate, etc.

Illustrative image (source: Internet)

According to Mr. Pham Minh Huan, the pension reform is not too worrisome, as there are 2 sources (state budget and social insurance funds). Those who retire before 1995 (the number is not big) will use the state budget, while those who retire after 1995 will be covered by the social insurance fund. “Currently, the life of a part of retirees is very difficult, especially for those who are enjoying a pension of less than 2 million VND/month. Therefore, in the draft of increasing pensions, social insurance and monthly allowances, instead of increasing by 10% on July 1, 2021, we can delay the time of increase to from January 1, 2022 and increased by 15%. To the people, they prefer increasing as much as possible, but the problem is whether the budget can last."- Mr. Huan said.

Expressing a point of view, Mr. Le Dinh Quang - Deputy Head of Labor Relations Department of the General Confederation of Labour informed, said, he would opt for what would be more beneficial for pensioners. The majority of low-paid pensioners are direct employees. A low income leads to low social insurance contributions, and until retirement, it continues to be more difficult. Therefore, the option, which may be a bit slower, but the entitlement is higher and more beneficial to the pensioner, would make more sense. “The plan to increase pension from July 1, 2021 has timely response due to general difficulties, but the rate is low; those who are in need would prefer the increase to come as quick as possible. If there are conditions to increase from July 1 with the rate of 15%, it will be the most reasonable, but obviously to balance the budget in the current context is quite difficult. If the adjustment from January 1, 2022, it will be 6 months slower compared to July 1; However, employees will have time to increase the benefit level.”- Quang analyzed.

Illustrative image (source: Internet)

Mrs. Nguyen Thi Lan Huong, former Director of the Institute of Labor Science and Social Affairs, said, the pension groups often face various difficulties, especially in the context of COVID-19 epidemic. Therefore, the salary increase for any group is precious and appropriate, because during that time the economic situation has been initially restored. However, increasing pension in the context of 2021 and the amount of money circulating in the large economy could potentially cause inflation. In addition, although the number of pensioners is not huge, but money needs to be extracted from the social insurance fund and the state budget, as a result, cost pressure is inevitable. “Due to difficulties, we have to reduce and delay the contribution to social insurance premiums, which leads to the fund's revenue not being abundant. If we spend more in this context, it will put more pressure on the funds.” - Huong said.