Pension of more than 6 million VND is still struggling, experts propose reasonable increases

The concerns of the elderly

Ms. Tran Thi Minh Hanh (resident in Thanh Tri commune, Hanoi City), who used to work in the construction industry and retired in 2012, said she had to tighten spending to cover living expenses.

6.2 million VND pension per month is the amount I receive after more than 30 years of paying social insurance (SI), from when I started working until retirement. With the current price level, I use as much as I have, but it's really not enough. I am the one who takes care of household expenses, from electricity and water to food, not to mention medicine" - Ms. Hanh shared.

According to her, increasing living costs, especially health-related expenses, make balancing finances difficult. Every expense must be carefully calculated, from daily food to medical examination and treatment costs.

When hearing the information that pensions may be adjusted from July 1st, Ms. Hanh said she was very much looking forward to it, but expected a higher increase, about 8-10%, to partly compensate for the increasing living costs.

Currently, the Ministry of Home Affairs is seeking opinions on the draft Circular guiding the adjustment of pensions, social insurance allowances and monthly allowances from July 1. 2026.

The Ministry of Home Affairs proposed 2 adjustment options. In the first option, some groups of subjects will receive an increase of 4.5% and an additional 200,000 VND/month compared to the benefit level of June 2026; the remaining groups will receive an increase of 8%.

The second option is to simultaneously increase by 8% on the benefit level of the month immediately preceding the adjustment time for all subjects subject to application.

Pension adjustment is only a component

Discussing this issue, Assoc. Prof. Dr. Tran Van Trung - Lecturer of Public Management Department, Faculty of Business Administration, University of Economics and Law, Vietnam National University Ho Chi Minh City - said that in the context of population aging pressure, balancing funds and budgets, no single "turn" can achieve the dual goal of both ensuring social security and ensuring sustainable development.

According to him, the optimal option should be a comprehensive policy package, in which pension adjustment is only a component.

Mr. Trung said that in the long term, it is necessary to apply a pension adjustment mechanism in a targeted direction, instead of increasing it simultaneously because it will consume a large fund but does not support the right necessary groups.

Accordingly, the optimal formula is to combine adjustments according to CPI (inflation) and a small fixed support fund with a target.

The CPI increase (about 3-5%) helps ensure sustainable purchasing power, while the support of 150,000 - 250,000 VND should focus on the group with low pensions. This is considered an "optimized" version of the 4.5% increase option with 200,000 VND.

In addition, experts emphasized the need to reform parameters to ensure the sustainability of the social insurance fund.

In which, increasing the retirement age according to the roadmap of the 2019 Labor Code is considered a financially effective solution.

At the same time, it is necessary to adjust the benefit rate in the direction of slight reduction in the long term and reduce the percentage accumulation rate by year, as well as expand the scope of participation, especially for informal sector workers and voluntary social insurance, in order to increase revenue sources.

Another important content is to clearly separate the functions of "insurance" and "social security".

Accordingly, the social insurance fund needs to operate according to the principle of contribution - benefit, while the state budget takes on the role of supporting poor elderly people and those with low pensions, avoiding the situation of "cross-carrying" causing pressure on the fund.

In addition, the development of a multi-layered pension system, including supplementary pension funds from businesses, the private sector and voluntary pension insurance, is also considered an important solution to reduce dependence on public pension funds.

From there, Mr. Trung believes that the optimal solution is not to increase simultaneously, but to have an adjustment mechanism combining inflation indexing and targeted support, accompanied by parameter reform and multi-layered system development, to ensure a balance between beneficiaries' rights and financial sustainability in the long term.