- The basis for calculating monthly pension is the basic salary and seniority allowance (if any) in the last month before retirement. In case of declining health or work requirements, the employee must transfer to another job or receive a lower salary than the previous level, the highest salary in the 10 years before retirement will be taken.
- Regarding the one-time subsidy before retirement calculated on the basic salary plus all the current allowances of civil servants and soldiers after the full-pay leave period. Specifically:
+ Having 25 years of work will receive a 2-month salary allowance
+ Having 30 years of work will receive a 3-month salary allowance
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Retirement insurance - 5 -
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Other Retirement Activities
+ Having 35 years of work, you will receive a 4-month salary allowance
Monthly pension for men with 30 years of service and women with 25 years of service is calculated at 75% of basic salary and seniority allowance (if any). In addition, for each additional year of service, an additional 1% is calculated, but not exceeding 95% of basic salary and seniority allowance.
Thus, the implementation of the pension regime under this Decree is basically the same as the previous period, with many limitations in terms of age, coefficients, and scope of implementation. Specifically:
- Although the method of calculating the conversion time has many strict points, it has caused some difficulties for employees in searching for records when they retire. Calculating the conversion time sometimes causes imbalance.
- In reality, the average retirement age is still low because the social preferential coefficient on time and actual working years is added to the number of years receiving pension. On the other hand, there is a preferential regime for those whose health has decreased by 18% or more.
- The scope of implementation of the regime is still limited, only applied to state employees, accounting for approximately 12% of the total workforce of the country but is very widespread. The regime is confused between insurance and incentives. The management agency is not unified, including the Ministry of Labor, War Invalids and Social Affairs, the Vietnam General Confederation of Labor and the Ministry of Health in charge of assessing working capacity. In general, to allow employees to retire due to disability or retirement, the agencies, enterprises, ministries, unions, party organizations, government agencies and all levels make decisions, the agency in charge of monitoring does not sign the decision to allow retirement.
Retirement is unreasonable. On the other hand, revenue and expenditure are not linked together, scattered, and in many places cause a lack of responsibility in resolving the issue of retirement for workers in accordance with current policies.
- The pension rate compared to the basic salary has a maximum level of 95%, which is too high and unrealistic. On the basis of revenue and expenditure balance, at the same time, the social insurance revenue from those who are paying social insurance must meet the payment for those who are receiving pension benefits during the same period. However, the number of employees is only 4 times the number of people receiving benefits during the same period. The social insurance payment rate of employees and employers is 20%, so if we consider the total, the social insurance revenue is not enough to pay for the 95% pension rate, not to mention the payment of other benefits such as: sickness, maternity, work accidents and occupational diseases... Therefore, the state budget always has to make up for the shortfall, which is why it is necessary to lower the subsidy rate for retirees.
- The conditions for enjoying retirement benefits still depend too much on the political requirements of each period, and are also influenced by the policy of reducing staff... Therefore, the number of people retiring before the age is still very high (over 80%), even some people retire at the age of 40, when retiring, the pension period is very long, maybe longer than the working period. Meanwhile, the social insurance contribution of 5% is only a small part of the pension rate, not counting the sick leave, maternity leave, work accident and occupational disease benefits during the working process... and later the death benefit. Meanwhile, those who retire at the right age and have worked for a long time receive a shorter pension because they may die early. All of these things reduce the economic and social significance of the pension regime. Therefore, there is an unfairness between contribution and enjoyment.
- The pension payment level is generally low, on average 52,600 VND/month/person, the lowest pension is 52,000 VND/month/person (excluding price compensation). Compared to 1985, the nominal pension at the end of 1991 increased 209.75 times while the price index increased 536.8 times, so the actual pension is only less than 38% compared to September 1985.
- In addition, the subjects participating in social insurance according to Decree 236/HDBT are still only covered by
including state employees without a majority
workers in other economic units. While non-state economic units are increasingly developing such as: Joint venture companies, LLCs, private companies... This is a very large subject that Social Insurance needs to exploit.
Thus, from 1962 to 1993, the social insurance policy and system were organized and implemented based on the provisions of Decree 218/CP and Decree 236/HDBT and a number of other decisions of the State. During this period, due to the influence of the old subsidy policy system, limitations were revealed such as: narrow scope of subjects, overuse of conversion time, social insurance fund could not promote its role as the backbone of the whole system, pension level did not ensure stable life for subjects, there was no relationship between social insurance contribution and social insurance benefits but only between social insurance benefits and salary. The retirement regime was governed by many other social policies and the organization of social insurance career management was decentralized, bureaucratic, etc.
Thus, current social insurance policies are no longer suitable.
carries many disadvantages, causing many complex difficulties in labor management and use, especially failing to meet the requirements of a multi-sector economic mechanism and failing to ensure the rights of workers, labor in the market mechanism has become a commodity. Therefore, innovation and improvement of the social insurance system in general and the pension system in particular is an objective and inevitable requirement and must be done immediately to suit the current practical situation.
Decree 43/CP and retirement regime
When our country's economy shifts to a market mechanism regulated by the State, the old social insurance mechanism is no longer suitable, requiring innovation. In the context of state-owned enterprises operating in the market according to the principle of preserving assigned capital, while self-financing costs, self-developing and paying obligations to the State budget, pension insurance must also separate itself from state subsidies, operate independently, self-account for revenue to cover expenditures, and state budget support is only a small part. With the development of multi-sector commodity production, types of enterprises are increasingly expanding, labor shifts and labor relations are also changing. Therefore, along with the state-owned employees, there are tens of millions of workers working in non-state economic sectors. Therefore, insurance for all workers needs to be expanded, unified, equal, ensuring the principle of contribution and benefit, reducing the burden on the State budget.
Faced with urgent issues arising in this innovation process, in order for social insurance to become a widespread policy, it is extremely urgent to innovate and improve in the following directions:
- Innovation must thoroughly implement the principle of equality for all workers participating in social insurance, which means that the subjects participating in social insurance must be expanded, without discrimination by region and economic sector between state-owned and non-state-owned enterprises. This equality must be regulated and guaranteed by sanctions in legal documents on social insurance. Accordingly, workers are entitled to social insurance payments based on the level of contribution and the period of social insurance payment.
- Innovation to ensure fairness in social insurance relations. Therefore, social insurance must be organized and operated centrally, independently and uniformly nationwide. It is necessary to innovate the organization, operating mechanism, and form a centralized social insurance agency. Establish a separate, independent and unified social insurance management agency from top to bottom, and at the same time separate social insurance policies from other social policies to ensure that each policy performs its function properly.
- The Social Insurance Fund must be independent from the State budget and at the same time implement
independent accounting principle
With the above innovation directions, on June 22, 1993, the Government issued Decree 43/CP. This Decree fundamentally innovates the system of social insurance regimes in general and pension regimes in particular to suit the actual conditions in our country. Since the Decree was issued, there have been clear changes, as shown:
- Decree 43/CP was issued to eliminate the calculation of time based on the conversion coefficient for employees upon retirement. Employees who have paid social insurance for 20 years or more and are 60 years old for men and 55 years old for women can retire and receive a monthly pension. In addition, if the unit has a need and the employee voluntarily continues to work, the age must not exceed 65 years old for men and 55 years old for women.
- Changed the working time condition to the social insurance payment time to calculate pension, avoiding the situation of employees retiring early due to the conversion of working time. This makes employees more responsible for themselves.
- Regarding the benefit level, employees are entitled to a pre-retirement benefit depending on the time and level of social insurance contributions. This one-time benefit applies to:
+ People with 20 to less than 30 years of insurance contributions receive subsidies.
1 month salary
+ People with 30 to under 35 years of social insurance contributions receive a subsidy of 2 months' salary.
+ People with over 35 years of social insurance contributions receive a subsidy equal to 3 months' salary.
For those working in the State sector, the salary used to calculate the one-time allowance is the salary of the month before retirement, including salary according to rank, position, position allowance, and regional allowance.
For those working outside the public sector, the salary is used to subsidize a
times upon retirement calculated based on average social insurance contribution salary.
- The lowest monthly salary is not less than the minimum wage of civil servants, the highest is 75% of the average salary of the 10 years before retirement and is covered by the Social Insurance organization for health insurance.
- Based on the year of social insurance contribution and the average salary for social insurance contribution, we calculate the one-time allowance and monthly pension for state employees as follows:
+ One-time subsidy: For each year of social insurance contribution, the subsidy is equal to one month of average salary. In which, the average salary is calculated by the average salary of the 10 years before retirement (for those working in the public sector).
t i * l i
L =
t i
In which: L: average salary
t i : time period i
l i : salary corresponding to period i
t i = 10 * 12 = 120 months
In case a state employee retires and the salary for social insurance contribution of the last 10 years before retirement includes the time before the exam date
The new salary regime on April 1, 1993 was converted to the salary regime
new to count
+ Monthly pension: Employees who have paid social insurance for 20 years will receive a pension equal to 55% of the average social insurance salary, then for each additional year of social insurance payment, an additional 2% will be calculated, but the maximum is only 75% of the average social insurance salary. The lowest pension is guaranteed to not be lower than the minimum wage (120,000 VND/month). If the pension is lower than that level, it must be compensated to that level.
In addition, in this Decree, the labor loss regime has been separated and regulated.
separate
Thus, Decree 43/CP was issued to overcome the shortcomings of
The previous texts are :
- About age: During this period, retirement age was implemented in a gradual manner.
Seriously and strictly, most of the retirees have reached the right age.
- Regarding the subjects and scope, the great demand for social insurance of other workers has been met. The subjects of participation have been expanded to include not only state employees but also salaried and wage workers in non-state sectors, private enterprises employing 10 or more workers, export processing zones, and foreign representative offices. Along with the expansion of the subjects of participation, the forms of participation have also been expanded. In addition to the compulsory form of participation, there is also a voluntary form of participation to meet the needs of workers.
- Because the social insurance regime has been applied to all economic sectors, all sectors pay at a unified level. Employers pay 15% of the total salary fund of the entire unit and employees pay 5% deducted from their monthly salary. This demonstrates the responsibility of the employer towards the employee and at the same time attaches the responsibility of the employee to the work they are doing. In addition, it also helps employees take care of themselves when they encounter risks or reach retirement age.
- In terms of organization: according to this Decree, there are many clear innovations compared to previous Decrees and policies. That is, the Social Insurance Fund is regulated to be managed uniformly according to the State regime, with independent accounting. Although
However, the social insurance fund is still managed by the Ministry of Finance, while implementation is coordinated by the Ministry of Labor, War Invalids and Social Affairs and the Vietnam General Confederation of Labor. The Decree also proposes to establish a Vietnamese social insurance system by merging the social insurance organization of the Ministry of Labor, War Invalids and Social Affairs with the Vietnam General Confederation of Labor.
- Regarding retirement policy in particular, the Decree also has many new regulations.
consistent with the actual situation shown as follows:
+ First of all, the time for calculating retirement insurance benefits is considered the actual time of paying social insurance and no longer needs to be converted as in previous policies. The time for calculating retirement insurance benefits according to Decree 43/CP does not require continuity, but the process of participating in social insurance contributions can be interrupted, as long as the total number of years of paying social insurance is enough for the number of years prescribed by the state. In particular, the working time before December 31, 1993 must still be continuous working time to be considered as paying social insurance. The calculation of converted working time has been separated from other social incentives, not considered in the time for calculating social insurance benefits. Thus, the unreasonableness in converting time has been eliminated, creating fairness for social insurance participants. On the other hand, the Decree also expands the form of enjoying retirement benefits for people participating in retirement insurance but not yet eligible for monthly pensions.
+ The salary used as the basis for calculating pension in this Decree is the average salary paid for social insurance in the last 10 years of working for employees in the state sector and during the entire period of social insurance payment for employees in non-state sectors. The minimum period of time to receive monthly pension is 20 years of social insurance payment, this level is applied to all male and female subjects. In addition, the number of years of social insurance payment will increase the pension benefit rate (an additional year of social insurance payment will receive an additional 2% rate). The basic benefit level is 55% of the average social insurance payment salary but not lower than the minimum salary (120,000 VND). This overcomes the limitations of the pension regime in Decree 236/HDBT before, which was unfair between men and women in terms of treatment.
+ Other regimes are also separated from the retirement regime, the disability allowance regime is regulated separately by a one-time salary regime. All regimes have been separated, avoiding the complexity in the social insurance regime and avoiding cases of early retirement and illegal retirement.
The amendments of Decree 43/CP have contributed to unifying the law or organization and management of social insurance. However, Decree 43/CP still has some unreasonable points as follows:
- The average salary used as the basis for calculating monthly pensions under Decree 43/CP is an amendment compared to the previous Decree 236/HDBT. However, the time to calculate the average social insurance payment for 10 years is too long, while Decree 236/HDBT uses the salary of the last month before retirement as the basis for calculating pensions. In fact, the pensions of retirees under Decree 43/CP are often much lower than those of retirees under Decree 236/HDBT. Thus, it is fair to say that retirees under Decree 43/CP are at a disadvantage compared to retirees under Decree 236/HDBT. This is a weakness in the innovation of social insurance policies.
- In addition, Decree 43/CP also has a provision that causes difficulties for some workers. That is the regulation that the minimum time to calculate retirement benefits is 20 years of social insurance contributions. Some workers in the South only participated in social insurance contributions after 1975 (because before 1975 the South was not liberated) even though they had worked before. Up to now, they are eligible for retirement in terms of age, but the condition of social insurance contributions has not been satisfied, so the settlement of retirement benefits for them is still limited.
- The management and implementation of pension insurance is still divided (managed by the Ministry of Labor, War Invalids and Social Affairs - Vietnam General Confederation of Labor - Ministry of Finance) and there is no unified management by the State.
In summary : Decree 43/CP has overcome some limitations of the old social insurance policy such as the subjects of participation, the management of social insurance funds, the period of social insurance payment, the monthly pension level... These amendments have contributed to the unification and legalization of the organization and management of social insurance, forming the basis for the formation of the social insurance charter attached to Decree 12/CP later. However, during the implementation process, although only for a short time, Decree 43/CP still has some unreasonable points that need to be further amended. On the other hand, due to the economic