The Social Insurance Law 2024, effective from July 1, 2025, stipulates many important changes in social insurance policies, including adjusting the way to calculate monthly pension levels.
Accordingly, the 2024 Social Insurance Law has reduced the social insurance payment period to 15 years to receive pensions for both men and women, thereby adjusting the calculation of pension benefits according to this regulation.
Regarding the pension calculation formula, the 2024 amended Law on Social Insurance inherits the provisions of the Social Insurance Law 2014. Specifically, the monthly pension for those who pay compulsory social insurance is calculated by multiplying by " Monthly pension rate" by "average monthly salary for social insurance contributions".
The monthly pension rate is determined as follows:
- For women: The monthly pension rate is calculated at 45% corresponding to 15 years of social insurance contributions, then for each additional year of contributions, an additional 2% is calculated; the maximum rate is 75% corresponding to 30 years of social insurance contributions.
- For men: The monthly pension rate is calculated at 45% corresponding to 20 years of social insurance contributions, then for each additional year of contributions, an additional 2% is calculated; the maximum rate is 75% corresponding to 35 years of social insurance contributions.
A notable change in the Social Insurance Law 2024 is the adjustment of the pension calculation method, especially the reduction of the minimum social insurance payment period to 15 years.
This will bring great opportunities for those who are late or have had an uninterrupted period of participation. Instead of having to receive one-time social insurance due to not meeting the conditions for payment time to receive a monthly pension, employees now have the opportunity to accumulate 15 years of contributions to be able to receive a pension and ensure their life after retirement.
The average monthly salary for social insurance contributions is determined as follows:
- Employees subject to the salary regime prescribed by the State who have paid social insurance for the entire period under this salary regime will have their average salary calculated as the basis for social insurance contributions for the number of years of social insurance contributions before retirement.
- Employees whose entire period of social insurance payment is according to the salary regime decided by the employer will have their average salary calculated as the basis for social insurance payment for the entire period.
- Employees have both time to pay social insurance subjects subject to the salary regime prescribed by the State and have time to pay social insurance according to the salary regime decided by the employer, the average salary as a basis for social insurance premiums of the time, in which the time of payment according to the salary regime prescribed by the State is calculated on average salary as a basis for social insurance payment as prescribed.
Notably, compared to the Social Insurance Law 2014, it is a regulation for male workers with a social insurance payment period of 15 years to less than 20 years: The monthly pension will be calculated at 40% of the average salary used as the basis for social insurance payment corresponding to 15 years of social insurance payment, then for each additional year of payment, an additional 1% will be calculated. This is an important change, creating conditions for many male workers with shorter social insurance contributions to still have the opportunity to receive pensions.
The 2024 Social Insurance Law adjusts the calculation of pension benefits, especially reducing the minimum social insurance payment period to 15 years, bringing great opportunities for those who participate in social insurance late or have had an uninterrupted participation period. Instead of having to receive one-time social insurance due to not meeting the conditions for payment time to receive a monthly pension, employees now have the opportunity to accumulate 15 years of contributions to be able to receive a pension and ensure a living when they are old.
This new regulation demonstrates the flexibility and humanity of social insurance policies, aiming to expand social insurance coverage and ensure long-term social security benefits for employees. Workers need to clearly understand these changes to have a suitable plan to participate in social insurance, ensuring retirement benefits for themselves in the future.
