According to the 2024 Law on Social Insurance, effective from July 1, 2025, pension adjustments in the coming time will be implemented according to a new mechanism, linked to the consumer price index (CPI) and the balancing capacity of the state budget as well as the Social Insurance Fund.
Article 67 of the 2024 Law on Social Insurance stipulates that pensions are adjusted based on the increase in the consumer price index, in accordance with the capacity of the state budget and the Social Insurance Fund. This means that when living costs increase, the State will consider adjusting pensions to ensure the actual value of the money that retirees are receiving.
Notably, the new law also sets out the requirement to adjust the pension increase level in a satisfactory way for those with low pensions and those who retired before 1995. This is a group that is suffering great disadvantages due to low salary levels and social insurance regimes in previous periods, leading to significant disparities compared to retirees in later periods. Prioritizing this group is to narrow the pension gap between generations of workers.
According to regulations, the Government will be the agency to specifically decide on the time, subjects and level of pension adjustment in each period, based on the principles that have been legalized.
Not only applied to compulsory social insurance participants, this adjustment mechanism is also applied to people receiving pensions from voluntary social insurance. Clause 2, Article 99 of the 2024 Law on Social Insurance clearly states that the pension adjustment of this group is also implemented according to Article 67, which is based on the CPI increase and the capacity of the budget and the Social Insurance Fund.
Thus, in the coming time, pension increases will no longer be egalitarian, but will be flexibly adjusted according to the economic situation, inflation and financial capacity of the State, while clearly prioritizing people with low pensions and people who retired before 1995. This is expected to contribute to improving the lives of retirees in difficult circumstances and ensure greater fairness between generations of retirees.
