Abolishing basic salary from July 1, how to calculate the lowest pension?

The abolition of the basic salary affects the adjustment of pension levels, allowance standards for people with revolutionary contributions, social assistance standards, and some groups of retired workers with low pensions such as those who retired before 1995, as well as resources to implement these policies.

Instead of the basic salary, the Government proposed a reference level for calculating social insurance of 1.8 million VND from July 1.

Discussing this issue, former Deputy Minister of Home Affairs Nguyen Tien Dinh said that from July 1, the reform of salary policy will abolish the current basic salary and coefficient. Instead, officials and civil servants will be paid according to their job position and management title.

Regarding the proposal to use the reference level for calculating social insurance instead of the basic salary, Mr. Dinh said that this proposal is appropriate when using the new salary calculation method.

People receive monthly pensions (Illustration: Hoa Le).

According to this person, the 2014 Social Insurance Law stipulates that the lowest monthly pension (applicable to employees who are eligible for pension and have paid 20 years of compulsory social insurance) is equal to the basic salary.

The current basic salary is 1.8 million VND/month. Thus, the lowest pension level is currently 1.8 million VND/month.

"When the basic salary no longer exists, the lowest pension must also change. Currently, the Government is proposing to replace it with a reference level, which is appropriate," said Mr. Dinh.

According to this expert, determining the lowest pension level to ensure the life of retirees is humane. If following the rules of social insurance contributions, people with low salaries will receive low pensions.

Mr. Dinh further cited that recently, those who retired before 1995 with low salaries were adjusted by absolute amount to 3 million VND, instead of by percentage like other groups.

Regarding the reference level, Mr. Dinh said that relevant agencies need to discuss and calculate carefully.

Previously, to concretize the proposal to continue implementing the current social insurance regimes linked to the basic salary, and at the same time, to absorb the opinions of National Assembly deputies on not regulating an absolute amount but using another basis instead, the Government proposed using the "reference level for calculating social insurance" to replace the "basic salary".

Specifically, the reference level for calculating social insurance is calculated at 1.8 million VND from July 1, 2024, replacing the basic salary for implementing social insurance according to the provisions of the 2014 law and for implementing social insurance according to the provisions of this amended law.

The reference level for calculating social insurance is adjusted according to Government regulations based on the increase in the consumer price index and in accordance with the capacity of the state budget and social insurance fund.

In addition to the lowest pension, based on the provisions of the Law on Social Insurance 2014, social insurance benefits are currently calculated based on the basic salary such as: The level of health care and recovery after illness for one day is equal to 30% of the basic salary; the one-time allowance when giving birth or adopting a child.

The level of benefit for recuperation and health recovery after maternity leave is equal to 30% of the basic salary per day; the funeral allowance is equal to 10 times the basic salary.

The monthly death benefit for each relative is 50% of the basic salary. In case the relative has no direct caregiver, the monthly death benefit is 70% of the basic salary.

Source: https://dantri.com.vn/an-sinh/bo-luong-co-so-tu-17-tinh-luong-huu-thap-nhat-ra-sao-20240521140809980.htm