Difference in pension and basic salary increases, proposal to amend the Law on Social Insurance

According to information from Vietnam Social Security, from 2024 to now, the whole country has had 2 pension adjustment phases. The 2024 pension adjustment phase (Decree 75/2024/ND-CP, effective from July 1, 2024). Decree 75/2024/ND-CP adjusts pensions for more than 3.12 million people. Accordingly, the additional budget (6 months of 2024) is 16,786 billion VND.

The 2nd pension adjustment phase from July 1. 2026. According to Vietnam Social Security, as of July 3, 2026, the unit has paid to more than 3.55 million people, with a total amount of 24,320 billion VND. The total expenditure in July increased by 8.08%, equivalent to an increase of 1.818 billion VND compared to June 2026. This is the result of an 8% increase in pensions, social insurance allowances and monthly allowances.

The pension adjustment has contributed to increasing people's income. However, according to current regulations in the Law on Social Insurance, the contribution level to receive pensions reveals inadequacies.

The Vietnam Social Insurance Portal posted information proposing to amend Article 73 of the 2024 Social Insurance Law on adjusting salaries as the basis for social insurance contributions to calculate the average monthly salary for social insurance contributions.

According to the draft amendment of point a, clause 1, Article 73, for employees receiving salaries according to the salary regime prescribed by the State and participating in social insurance before January 1, 2016, the salary used as a basis for social insurance contributions will be adjusted based on the increase in the reference level of each period.

Notably, the draft supplements regulations that salaries already paid for social insurance before the new law takes effect will be adjusted according to the base salary at the time the law takes effect before switching to adjustment according to the reference level.

Analyzing this proposal, in the submission of the draft amendment to the Law on Social Insurance of the Ministry of Home Affairs, it is stated that Resolution No. 27-NQ/TW in 2018 on salary policy reform has set a goal to abolish the base salary level. However, this content has not yet been implemented.

The 2024 Law on Social Insurance has added the concept of "reference level" to serve as a basis for calculating contributions and enjoyment of some social insurance regimes.

However, the law also stipulates that when the base salary level has not been abolished, the reference level is equal to the base salary level; when the base salary level is abolished, the reference level must not be lower than the base salary level at that time.

According to the drafting agency, this regulation arises inadequacies when the Government adjusts the base salary and pension with different increases. Typically, in July 2024, the base salary was adjusted to increase by 30%, while the pension only increased by 15%.

This leads to a pension gap between retirees before and after the adjustment period, especially for retirees from the state sector.

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