How to calculate pensions for people who retire early

Ms. Nguyen Nhung Chau (Nghe An) said that she has been teaching at a part-time kindergarten since 1988. From September 1999 to 2002, she participated in voluntary social insurance; from 2002 to present, she continued to participate in compulsory social insurance. Currently, Ms. Chau wonders: If she retires early, how will her pension be calculated?

Responding to this issue, Vietnam Social Security said that determining the conditions and level of pension benefits depends on many factors, the most important of which is the time, type of social insurance participation, number of years of contribution and retirement age.

Time of participating in social insurance decides how to calculate pensions

According to current regulations, employees can participate in compulsory or voluntary social insurance. The time spent participating in each type is accumulated to consider pension conditions.

In Ms. Chau's case, the period of voluntary social insurance payment from 1999 to 2002 and the period of compulsory social insurance payment from 2002 to present are all calculated together when considering retirement benefits.

Conditions for receiving pensions according to the Social Insurance Law 2024

The 2024 Social Insurance Law stipulates that employees participating in compulsory social insurance upon retirement, with 15 years or more of social insurance contributions, will receive a pension if they fall into one of the following cases:

Meeting the retirement age according to the provisions of the Labor Code;

The retirement age is lower in cases of arduous, toxic, dangerous occupations or work in areas with particularly difficult socio-economic conditions, provided that they have enough time to pay social insurance according to the law.

Early retirement due to reduced working capacity

The law also allows employees to retire early if their working capacity is reduced, with the condition:

Having paid 20 years or more of compulsory social insurance;

Minimum 5 years of early retirement compared to retirement age if the working capacity is reduced from 61% to less than 81%;

Early retirement is a maximum of 10 years if the working capacity is reduced by 81% or more.

In these cases, the pension will be lower than that of people retiring at the right age.

How to calculate monthly pension

According to the Social Insurance Law 2024, the monthly pension is calculated based on the average salary used as the basis for social insurance contributions, specifically:

Female workers:

Paying 15 years of social insurance is entitled to 45% of the average salary;

Each additional year is paid by 2%, up to 75%.

Male workers:

Paying 20 years of social insurance is entitled to 45%;

Each additional year is paid by 2%, up to 75%.

In case of payment from 15 to under 20 years, the initial benefit level is 40%, then each additional year of payment is added by 1%.

How much is early retirement reduced?

For those who retire before the prescribed age, after determining the beneficiation rate according to the number of years of social insurance contributions, each year of early retirement will have a 2% pension reduction.

This means that if you retire a few years early, your monthly pension can be significantly reduced and this reduction will apply throughout your pension period.

Not enough information to calculate specific figures

According to Vietnam Social Insurance, because Ms. Nhung Chau has not provided complete information such as: year of birth, expected retirement age, health status, salary level used as the basis for social insurance contributions, etc., it is not possible to accurately calculate the pension she will receive if she retires early.

Vietnam Social Insurance recommends that Ms. Chau compare the above regulations with her case or contact the nearest social insurance agency directly, provide full information for advice, specific answers and ensure benefits upon retirement.

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