Highest pension in Vietnam pays 5,200 USD per month

Highest pension in Vietnam pays 5,200 USD per month, Illustrative image (Photo: vov.vn)

Hanoi - The person with the highest pension in Vietnam receives more than 124 million VND (5,200 USD) per month, according to the Vietnam Social Security (VSS).

As of April this year, a total of 471 people receive a monthly pension of more than 20 million VND (850 USD), said VSS. All of them worked in private companies or foreign enterprises in Vietnam and had paid social insurance at a high level.

The man with the highest pension in the country, referred to as T. throughout this article, lives in HCM City.

Before retiring, T. was chairman of the members' council and general director of a company operating in Vietnam.

T. retired in April 2015 with a pension of more than 87.3 million VND (3,700 USD) per month.

After five adjustments of the State pension, by June this year, T.'s pension is more than 124 million VND per month.

T. paid social insurance premiums for 23 years during the period before 2007 when a person's salary was taken as the basis for social insurance payment, T.’s social insurance premium was very high.

There were times when T.’s average social insurance fee was more than 200 million VND (8,500 USD) per month.

When the Law on Social Insurance 2006 came into effect, the maximum monthly fee for compulsory social insurance was equal to 20 months of the general minimum salary. Accordingly, from January 2007 to March 2015, T. always paid social insurance premiums at the highest rate as prescribed, with an average salary of 15.4-23 million VND (650-980 USD) per month.

Statistics last year showed that the average social insurance was 5.73 million VND (240 USD) per month, equal to 76% of workers’ average income.

Foreign direct investment (FDI) enterprises have the highest social insurance payment.

However, some enterprises separate or transfer allowances to other benefits so that they do not have to pay social insurance.

Therefore, the social insurance is only slightly higher than the minimum wage. This payment makes the pension very low.

To improve the situation, the amended social insurance law has two options for lump-sum payments.

The first option allows the employee to receive full pay-out for the entire period of participating in social insurance and then would not be entitled to a monthly pension.

As per the second option, the employee would receive a lump-sum payment for at most half of the period of contributions to the retirement and survivorship allowance fund. The remaining period would be reserved for calculating social insurance benefits when the employee reaches retirement age.

Pension fund landscape to be diversified Driven by incrementally surging demand from a gradually ageing population, more credit institutions and consumer finance companies are diversifying their loan schemes, including loan programmes for retirees.