The Law on Social Insurance stipulates that the lowest monthly pension for workers contributing to compulsory social insurance must equal the base salary, currently VND 1.8 million. If a recipient receives less than this amount, the state budget or the Social Insurance Fund makes up the difference. The draft amended law removes this policy because the base salary will no longer apply from July 1.

The Government explained that the minimum pension provision applies only to workers who have contributed to compulsory social insurance for 20 years, whereas the draft law reduces the contribution period to 15 years and sets the minimum earnings used to calculate social insurance contributions for certain groups at half the highest regional minimum wage (projected at VND 4.96 million from July 1). Retaining the minimum pension would therefore be inconsistent with the proposed amendments.

Under the draft amended law, the lowest tier of the social security system is the social pension allowance, with a proposed benefit of VND 500,000 per person per month.

Prof. Dr. Giang Thanh Long, a senior lecturer at National Economics University (NEU), calculated that VND 500,000 per month, or VND 6 million per year, amounts to only about 6% of Vietnam’s GDP per capita in 2023. This amount cannot meet current living costs, so even with adjustments in the coming period, recipients would still struggle to make ends meet.

According to Long, scrapping the minimum pension means abandoning the social protection floor that the system is working toward: guaranteeing a minimum benefit for people beyond working age so that many older people do not fall into poverty despite receiving pensions or social assistance. To establish an appropriate minimum benefit, a corresponding minimum contribution must be determined now.

Citing Resolution 28 on social insurance policy reform, Long said that, beyond expanding coverage, the system must also ensure income based on the principles of contributions linked to benefits, fairness, equality, risk sharing, and sustainability. In other words, workers have the right to access social insurance and receive at least a minimum level of social protection to ensure their quality of life in old age. The reform aims for an older population receiving pensions rather than social assistance.

In practice, many people can only afford low contributions for one reason or another and therefore receive low benefits, which may not even cover living costs as prices fluctuate. Vietnamese people are living longer but face many health problems, and some still depend on care from their children, families, and communities.

“Maintaining the minimum pension means that the social insurance system and the Government commit to a social protection floor that guarantees a minimum standard of living for older people,” the expert said. He added that pensions above the floor would not need adjustment, while the system would share part of the cost of raising benefits below the floor to that minimum level.

According to Long, the minimum pension should not be set as a specific sum but as a percentage of a certain income level. Fixing an absolute amount would be rigid and would not create a mechanism for automatic adjustments when prices and income benchmarks change. As these macroeconomic variables rise, that fixed amount would reduce beneficiaries’ purchasing power.

Responding to concerns that retaining a minimum pension floor could encourage workers to choose low contributions and adopt the mindset that “the state will make up any shortfall,” Long said no one wants to be poor and dependent in old age. Everyone tries to contribute more to receive a higher pension. Under current regulations, many workers who previously opted for a lump-sum social insurance withdrawal now want to restore their contribution records and resume participation in the system, but cannot. Policy design needs to establish appropriate contribution levels at each stage so that future pensions do not fall below the floor.

With the population aged over 60 projected to reach 29 million in 2049—just 25 years away—Vietnam urgently needs to expand social security coverage in both breadth (the number and proportion of participants) and depth (benefit levels and a guaranteed minimum standard of living). Prof. Long cited South Korea, a wealthy country where as many as 48% of older people live in poverty—the highest rate among members of the Organization for Economic Cooperation and Development (OECD)—because of low coverage and benefit levels. This is a “wake-up call” for many countries with modest incomes but rapidly aging populations, including Vietnam.

“Vietnam will become an aged society in 2036, when people over 65 account for 14% of the population. Without fundamental changes to social insurance policy, it will be very difficult to turn the situation around. Tens of millions of older people will receive no social protection at all,” Long said.

Sharing this view, Pham Minh Huan, former Deputy Minister of Labor, Invalids and Social Affairs, explained that social insurance contributions currently average VND 5.7 million per month, making high pensions difficult to achieve. Reducing the contribution period to 15 years would lower pensions further.

Huan supported retaining the minimum pension because previous amendments had established it as a basic social protection floor to prevent older people from being “impoverished.” With the base salary no longer applicable from July 1, the drafting committee could adopt a reference level and develop a specific, clear calculation method as a basis. In the long term, the only way to raise pension levels is to increase actual social insurance contributions.

During National Assembly deliberations in late May, many deputies expressed concern that scrapping the minimum pension could “set social protection back,” as the proposed minimum of VND 500,000 amounts to only 25–33% of the current urban and rural poverty thresholds.

Ma Thi Thuy likened the potential decline in social protection to a “free fall,” while deputy Vuong Thi Huong warned that it could lead to the impoverishment of a segment of the population in the future. Tran Kim Yen said some older people currently receive pensions below the minimum level. This provision therefore needs to be reconsidered to ensure better social protection for people beyond working age.

The amended Law on Social Insurance is expected to establish three tiers in the social security system. The first is basic social insurance for workers from the time they begin working and enter the social security system until they reach retirement age. This tier includes benefits for sickness and maternity, insurance for occupational accidents and diseases, unemployment benefits, and contributions toward a pension once eligibility requirements are met. The next tier covers workers who have reached retirement age but are under 75 and have not completed the required contribution period proposed in the draft law. The remaining tier provides social pension allowances for people over 75.

Nationwide, social security coverage for older people beyond retirement age remains below 40%, including 2.7 million pension recipients, 630,000 people receiving monthly social insurance allowances from the Social Insurance Fund, and more than 1.8 million receiving social pension allowances from the state budget. The Party Central Committee’s Resolution 28 sets coverage targets of 55% by 2025 and approximately 60% by 2030.

The International Labour Organization projects that, without state budget support, Vietnam will have more than 16 million older people without pensions in 2030 because population aging is outpacing economic development. The 2022 Vietnam Aging Survey (VNAS) found that support from children accounted for the largest share of older Vietnamese people’s income sources, at 38%; 29% came from continued work, only 15% from pensions, and 10% from social allowances.

The draft amended Law on Social Insurance is expected to be passed by the National Assembly on June 25 and take effect on July 1, 2025.

Hong Chieu

Link: https://vnexpress.net/bo-luong-huu-toi-thieu-de-khien-hang-trieu-nguoi-gia-ngheo-di-4754307.html