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The 2024 Social Insurance (BHXH) Law, effective from July 1, 2025, brings several significant changes to the pension system. Here are the noteworthy new points:
1. REDUCTION IN THE MINIMUM NUMBER OF YEARS OF SOCIAL INSURANCE CONTRIBUTIONS FOR PENSION ELIGIBILITY:
- Previously, employees needed to contribute to social insurance for a minimum of 20 years to qualify for a pension. From July 1, 2025, this period is reduced to 15 years. This facilitates more employees, especially those who joined social insurance later in their careers, to have the opportunity to receive a pension in their old age.
- The method for calculating monthly pension benefits differs between male and female employees.
- For female employees: The monthly pension is calculated as 45% of the average salary used as the basis for social insurance contributions, corresponding to 15 years of contributions. After that, for each additional year of contribution, the benefit rate increases by 2%, up to a maximum of 75%, corresponding to 30 years of contributions.
- For male employees: The monthly pension is calculated as 45% of the average salary used as the basis for social insurance contributions, corresponding to 20 years of contributions. After that, for each additional year of contribution, the benefit rate increases by 2%, up to a maximum of 75%, corresponding to 35 years of contributions.
Pension calculation based on years of social insurance contributions for men and women
3. ADJUSTMENT OF THE REDUCTION RATE FOR EARLY RETIREMENT:
- From July 1, 2025, each year of retirement before the prescribed age will result in a 2% reduction in the pension amount.
- If the early retirement period is less than 6 months, there is no reduction; from 6 months to less than 12 months, there will be a 1% reduction. This regulation aims to encourage employees to work until the regulated retirement age.
- The starting time for pension benefits is calculated from the first day of the month immediately following the month the employee meets the age and social insurance contribution requirements.
- In cases where voluntary social insurance participants make a one-time payment for the remaining years, the pension benefit commencement time is the first day of the month immediately following the month the full payment for the remaining years is made.
- Many new proposals regarding the time and conditions for pension benefits from July 1st
- For individuals with only the year of birth (without specific dates and months), the month of reaching retirement age is determined based on January 1st of that birth year.
- The pension benefit commencement time will be the first day of the month immediately following the month the person meets the requirements for pension benefits.
These changes aim to create more favorable conditions for employees to access and receive pension benefits, while also ensuring the fairness and sustainability of the social insurance fund. Employees should update their information and contact social insurance agencies for specific advice on their benefits.
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