Pensions in Vietnam hindered by companies' low social insurance payments

By Hong Chieu   July 29, 2023 | 06:00 pm PT
Pensions in Vietnam hindered by companies' low social insurance payments
People do physical exercises at a garden in Hanoi. Photo by VnExpress/Ngoc Thanh
Vietnamese pensions are not as high as they should be as companies have finagled ways to decrease their social insurance payouts, according to the Ministry of Labor.

In a report on a draft Law on Social Insurance released this week, the ministry reported that although Vietnam's pension rate - the percentage of a pensioner’s social insurance payments that will be paid out in retirement - is the highest in Southeast Asia at 75%, retirees actually receive exceedingly small pensions as companies pay very little into the social insurance system used to fund pensions.

Despite the high pension rate, the average amount of monthly pension per capita in Vietnam is only around VND5.4 million ($227.87) due to the low amount of compulsory social insurance payment, which is on average only VND5.73 million a month, 22-77% higher than the minimum wage.

The labor ministry said that while social insurance payments have increased based on growing monthly salaries, the increase has not been sufficient.

A major problem, according to the ministry, is that businesses have shifted around allowances and benefits programs in order to avoid having to pay for workers’ social insurance.

Documents for the amendments to the Law on Social Insurance are expected to be presented before the National Assembly in October, passed in May 2024 and go into effect starting 2025.

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