Proposal to increase pensions and social insurance benefits from July 1, 2023

Subjects applying the method of calculating pensions and social insurance benefits in Article 1 of the draft Circular include: Subjects specified in Points a, b, c, h and i, Clause 1, Article 1 of the draft Decree on pensions, social insurance benefits and monthly benefits before July 1, 2023; Subjects specified in Points a, b and c, Clause 1, Article 1 of the draft Decree who retired to receive pensions, social insurance benefits and monthly benefits before January 1, 1995, after making adjustments according to the provisions of Clause 1, Article 2 of the draft Circular, have pensions, social insurance benefits and monthly benefits of less than VND 3,000,000/month.

Article 2 of the draft Circular proposes the method of calculating pensions, social insurance benefits, and monthly allowances applicable from July 1, 2023.

Firstly, the pension, social insurance benefits and monthly allowances of the subjects specified in Clause 1, Article 1 of the draft Circular are adjusted as follows:

Increase by 12.5% on pension, social insurance benefits and monthly allowances of June 2023 for subjects specified in Clause 1, Article 1 of the draft Circular, which has been adjusted according to Decree 108/2021/ND-CP adjusting pensions, social insurance benefits and monthly allowances. Specifically, pension, social insurance benefits and monthly allowances from July 2023 = Pension, social insurance benefits and allowances of June 2023 x 1.125.

Increase by 20.8% on the pension, social insurance allowance and monthly allowance of June 2023 for the subjects specified in Clause 1, Article 1 of the draft Circular which has not been adjusted according to Decree 108/2021/ND-CP adjusting pension, social insurance allowance and monthly allowance. Specifically, the pension, social insurance allowance and monthly allowance from July 2023 = Pension, social insurance allowance and allowance of June 2023 x 1.208.

Second, from July 1, 2023, the pension, social insurance benefits and monthly allowances of the subjects specified in Clause 2, Article 1 of the draft Circular will be adjusted as follows:

For people with pension, social insurance allowance, monthly allowance under 2,700,000 VND/person/month: Pension, social insurance allowance, monthly allowance after adjustment = Pension, social insurance allowance, monthly allowance before adjustment + 300,000 VND/month.

For those with a salary from 2.7 million VND to less than 3 million VND/month, the remaining amount will be increased to 3 million VND/month.

The Ministry of Labor, War Invalids and Social Affairs said that after adjusting pensions, monthly social insurance benefits, and monthly allowances, the State budget will increase by more than VND2,662 billion for the last 6 months of this year, with more than 891,000 people being adjusted.

The Social Insurance Fund increased spending for the last 6 months of this year by more than 9,675 billion VND, to increase salaries for more than 2.17 million people.

For the group of people who retired and received pension and benefits before January 1, 1995 with a benefit level of less than 3 million VND/month, it is expected that more than 236 thousand people will receive an increase, and the State budget is expected to spend more than 272 billion VND for the last 6 months of the year.

The total additional budget for the adjustment of pensions, social insurance benefits, and monthly allowances from July 1 (until the end of the year) is over VND12,600 billion, of which the State budget increases by more than VND2,982 billion, and the social insurance fund increases by more than VND9,675 billion.

Explaining the different increases in pensions, social insurance benefits, and monthly allowances, the Ministry of Labor, War Invalids and Social Affairs said that Resolution 69/2022 of the National Assembly approved a plan to increase pensions and monthly allowances by 12.5% for groups guaranteed by the State budget.

According to the social insurance law, when the basic salary increases from July 1, some regimes will also be adjusted to increase accordingly. With the increase in the basic salary to 1.8 million VND/month (an increase of 20.8% compared to the current level), people who retire and receive social insurance benefits after July 1 will have a higher pension than those who retired before.

On January 1, 2022, pensions were adjusted to increase by 7.4%, but the basic salary was not increased, so the group retiring after this time until before the basic salary increase (from January 1, 2022 - June 30, 2023) had lower pensions than those retiring before, even though they had the same calculation conditions; and lower than those retiring after July 1, 2023 (because at this time the basic salary also increased, so the level of calculating the regime increased accordingly).

Therefore, the Ministry of Labor, War Invalids and Social Affairs believes that it is necessary to adjust the additional increase for the group retiring from January 1, 2022 - June 30, 2023, to ensure correlation and fairness between retirement times.

Regarding the time of pension increase from July 1, the Ministry of Labor, War Invalids and Social Affairs explained that it is to match the time of increasing the basic salary. The National Assembly has passed a Resolution to increase 12.5% of pension and social insurance benefits for those guaranteed by the State budget and provide additional support for those who retired before 1995 with low benefits.

Regarding the additional adjustment for the pension group under 3 million VND/month, the Ministry of Labor, War Invalids and Social Affairs said that the group of retirees, those who stopped receiving benefits and death benefits before January 1, 1995, mostly had lost their ability to work, so their working time was short, and their pension and benefits were low compared to the general level.

The additional adjustment for this group is a preferential policy of the State for those who have worked for a period of time (in the state sector before 1995).

Wisdom

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