Gradually narrowing the pension gap between generations
The government has repeatedly increased pensions, prioritizing people with low pensions to gradually narrow the gap between generations.
On December 7, 2021, the Government issued Decree 108/2021/ND-CP deciding to increase pensions from January 1, 2022. Accordingly, from this time, the pension level, social insurance allowances and monthly allowances of beneficiaries will increase by 7.4%.
This is also the first time the Government has applied a second pension increase measure for people retiring before January 1, 1995.
This policy is proposed to be implemented to help improve pensions for workers retiring before 1995 because this is a group with a very low average pension, narrowing the benefit level between generations of retirees, and at the same time contributing to raising the "bottom" of pensions.
In this increase, after implementing a general adjustment of 7.4%, if these people still have pensions, social insurance allowances, and monthly allowances below 2,500,000 VND/month, they will be increased for the second time, according to 2 groups.
First, increase by 200,000 VND/person/month for people with pensions, social insurance allowances, and monthly allowances from 2,300,000 VND/person/month or less.
Second, increase to 2,500,000 VND/person/month for people with pensions, social insurance allowances, and monthly allowances from 2,300,000 VND/person/month to less than 2,500,000 VND/person/month.
Next, the Government adjusted to increase pensions, social insurance allowances and monthly allowances from July 1, 2023, into 2 groups.
First, an increase of 12.5% on the pension level, social insurance allowance and monthly allowance of June 2023 for those who are receiving pensions and allowances and have been increased pensions from January 1, 2022 according to Decree 108/2021/ND-CP.
Second, an additional 20.8% increase on the pension level, social insurance allowance and monthly allowance of June 2023 for those who are receiving pensions and allowances and have not been increased pensions from January 1, 2022 according to Decree 108/2021/ND-CP.
At the same time, the operating agency continues to raise pensions for the second time for those who retired before January 1, 1995. Specifically, after a general adjustment, if the benefit level is still lower than 3,000,000 VND/month, it will be adjusted to increase for the second time according to 2 groups.
First, increase by 300,000 VND/person/month for people with a benefit level below 2,700,000 VND/person/month.
Second, increase to 3,000. 000 VND/person/month for those with a benefit level from 2,700,000 VND/person/month to less than 3,000. 000 VND/person/month.
On June 30, 2024, the Government adjusted an additional 15% increase on the pension, social insurance allowance and monthly allowance of June 2024 from July 1, 2024.
For those who retired before January 1, 1995, after adjusting to increase by 15% and the benefit level is lower than 3,500,000 VND/month, they are adjusted to increase for the second time according to 2 groups.
First, increase by 300,000 VND/person/month for people with a benefit level below 3, 200,000 VND/person/month.
Second, increase to 3,500,000 VND/person/month for those with a benefit level from 3,200,000 VND/person/month to less than 3,500,000 VND/person/month.
Thus, after 3 times of implementing the second pension increase policy as above, it has helped narrow the pension gap between retirees before 1995 and later generations. At the same time, the average pension level also increases year by year.
The group retiring before 1995 is currently the group with the lowest benefit level in the system, so for many years, the Government has continuously had a policy of "bottom-fishing" pensions for this group.
The milestones of 2.3 million VND/month, 2.5 million VND/month, 3 million VND/month or 3.5 million VND/month put forward in the adjustments are actually floor thresholds to support low pension groups, gradually narrowing the benefit gap between generations of retirees.
According to statistics from the Social Insurance agency, to date, the group with an average benefit level of 3,000,000-6,,000,000 VND/month is the largest, reaching more than 1,347,000 people. Next is the group of subjects with a benefit level of 6,000,000-10,,000,000 VND/month, reaching more than 1,063,000 people.
Talking to a reporter of Lao Dong Newspaper, Mr. Le Van T (born in 1961, Son Tay ward, Hanoi) - formerly a worker of Electrical Equipment Company 1 - said that he retired under the category of loss of working capacity from 2004. At that time, his pension was about 2.3 million VND/month, plus an allowance of 800,000 VND/month, totaling about 3.3 million VND/month.
After many adjustments, he currently receives about 3.5 million VND in pension and the total pension and allowance is about 5.4 million VND/month.
According to current regulations, male workers born in 1961 working in normal conditions will retire in 2021 when they reach the age of 60 and 3 months. Meanwhile, Mr. T retired in 2004, when he was only 43 years old, belonging to the group of cases of early retirement under special circumstances such as loss of working capacity or streamlining staff.
For cases of early retirement, each year of early retirement will reduce the pension benefit rate by 2% according to regulations. This is also the reason why his current pension level is low.
According to Mr. T, although the pension level is not high, it is still an important source of income to help him and his wife cover essential daily expenses such as electricity, water, gas or basic living.
However, under the pressure of increasing commodity prices over time, the current pension is only enough to meet the minimum needs, making it difficult to manage arising expenses such as weddings, funerals, longevity celebrations or long trips. Therefore, the couple still maintains small business in the locality to increase income.
I hope the Party and State will continue to pay attention and have more policies to adjust pensions for retirees and people receiving allowances, especially those who retire early or have retired many years ago because the current benefit level is very low" - Mr. T expressed.
Pensions for low-entitlement groups may be higher
In the latest draft decree adjusting pensions, the Ministry of Home Affairs proposes to increase pensions, social insurance allowances and monthly allowances by an additional 8% from July 1, 2026.
At the same time, the Ministry of Home Affairs continues to implement policies to support the group of people with low pensions as above, proposing a second pension increase for those who retired before January 1, 1995.
Accordingly, this group, after adjusting to increase by an additional 8% but the new pension and allowance level is still lower than 3,800,000 VND/month, will be increased for the second time.
The second pension increase is applied according to 2 groups.
Group 1 is people who, after an increase of 8%, have a benefit level below 3,500,000 VND/person/month, then they are given an additional increase of 300,000 VND/person/month.
Group 2 is those who, after increasing by 8%, have a benefit level from 3,500,000 VND/person/month to less than 3,800,000 VND/person/month, then it is increased to 3,800,000 VND/person/month.
If this proposal is approved, pensions for low-entitlement groups will continue to be increased, narrowing the gap with other groups.
