Paying social insurance with a salary of a few hundred thousand dong, is the pension enough to live on?

Ms. Tran Thi Quy is a manual worker, 42 years old this year. She has participated in social insurance (SI) since 2006 with a salary that is the basis for SI contribution being quite low.

During the period 2006-2010, she paid social insurance according to the basic salary of 890,000 VND. During the period 2011-2020, Ms. Quy paid according to the basic salary of 3,200,000 VND. By the period 2021-2022, Ms. Quy paid social insurance at the rate of 7 million VND/month. From 2023 to present, she has paid at the rate of 8 million VND/month.

Ms. Tran Thi Quy shared: "When I retire, how much will my pension be? I am worried because if I calculate the average pension, will the pension be enough to give me peace of mind when I retire?"

According to Vietnam Social Security, pensions are calculated based on the actual salary changes of employees who have participated in social insurance. Because Ms. Quy has not reached retirement age, there is no basis to determine the average salary participating in social insurance as the basis for calculating pensions.

However, the current pension calculation mechanism has been reviewed to ensure the most fairness for all workers. For the group of workers who implemented the salary regime prescribed by the State in the previous period, with a very low social insurance salary (calculated according to the basic salary), there will be a pension calculation mechanism to ensure that the pension is not too low when they retire.

According to Vietnam Social Security, the method of calculating the average monthly salary for social insurance contributions as the basis for calculating pensions for employees is stipulated in Article 62 of the current Social Insurance Law No. 58/2014/QH13 issued in 2014. Different calculation methods are used for 3 groups of employees with different social insurance participation periods.

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In addition, workers do not need to worry about low pensions compared to prices at the time of retirement. Because the law has provisions regulating pension adjustments based on the annual inflation index.

Specifically, Clause 2, Article 79 of the 2014 Law on Social Insurance stipulates: "The monthly income for which social insurance has been paid to serve as the basis for calculating the average monthly income for which social insurance has been paid of employees is adjusted based on the consumer price index of each period according to Government regulations".

Source