In case the pension rate is reduced when retiring early
According to the Social Insurance Law 2024, employees who retire early will have their pension rate reduced, except for cases of early retirement under 6 months as prescribed.
How to calculate monthly pension
Pursuant to Article 66 of the Law on Social Insurance 2024, the monthly pension of eligible employees is determined based on the period of social insurance payment and the average salary used as the basis for social insurance payment.
For female workers, the pension is equal to 45% of the average salary after 15 years of social insurance contributions; then, each additional year of contributions is calculated by 2%, up to a maximum of 75%.
For male workers, the pension is equal to 45% of the average salary when having 20 years of social insurance contributions; then, each additional year of contributions is added by 2%, up to a maximum of 75%.
In the case of male workers with a social insurance payment period of 15 years to less than 20 years, the starting benefit level is 40% corresponding to 15 years of contributions, then each additional year of contributions is calculated by 1%.
Will early retirement have a pension cut?
According to Clause 3, Article 66 of the Law on Social Insurance 2024, employees who are eligible for early retirement as prescribed in Article 65 of this Law will still be entitled to a pension according to the general formula, but will have their benefit rate reduced due to early retirement.
For each year of early retirement, the pension rate will be reduced by 2%.
In case of early retirement under 06 months, the pension percentage will not be reduced.
In case of early retirement from 06 months to less than 12 months, the pension rate will be reduced by 1%.
Thus, early retirement does not mean losing the right to pension, but reduces the pension rate, except in cases where the early retirement period is very short as prescribed.
Some specific cases
The law also stipulates separate pension levels for employees in some special occupations and jobs in the People's Armed Forces, with funding guaranteed by the state budget.
In addition, for employees who have paid social insurance according to international treaties and of which Vietnam is a member but have paid in Vietnam for less than 15 years, each year of payment will be calculated at 2.25% of the average salary used as the basis for social insurance payment.
Early retirement will have a decrease in the pension rate, with a common reduction of 2% for each year of early retirement, except for cases of early retirement under 6 months or from 6 months to under 12 months as prescribed. Therefore, employees need to carefully calculate the retirement date to ensure long-term pension benefits.
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