This Circular guides the calculation method for the average monthly salary paid for social insurance contributions as the basis for calculating pensions for specific subjects from October 1, 2004 onwards. The provisions apply to retirees, workers transitioning to other industries, laborers working under contracts at State-owned enterprises converted to joint-stock companies with pensions lower than the general minimum wage.
Scope of application
Retirees; military personnel, civil servants transitioning to other industries; laborers working under various types of contracts at State-owned enterprises converted to joint-stock companies; individuals with pensions lower than the general minimum wage.
Key points
- Retirees and military personnel, public security officers, civil servants transitioning to other industries → shall be calculated based on the average monthly salary paid for social insurance contributions according to specific regulations from October 1, 2004 onwards.
- Laborers working at State-owned enterprises converted to joint-stock companies → shall use the average monthly salary paid for social insurance contributions of the last five years to calculate their pension if the company fully implements the wage scale and pays social insurance as required.
- Individuals with pensions lower than the general minimum wage → shall be supplemented to the level of the general minimum wage or VND 435,000/month if they retire alone.
- Workers from dissolved agencies or units and have been declared bankrupt → shall be entitled to a pension based on their previous salary level and adjusted by an additional 10%.
- This Circular takes effect from October 15, 2004.
🌐 Social impact of this document
- Positive impact: Helps workers benefit from pension adjustments based on new salary levels, ensuring fairness in pension calculations.
- Negative impact: May cause difficulties for businesses in fully implementing wage scales, salary tables, and social insurance payments.
❓ Frequently asked questions
Who is eligible to have their average monthly salary paid for social insurance contributions calculated?
Retirees; military personnel, public security officers, civil servants transitioning to other industries; laborers working under various types of contracts at State-owned enterprises converted to joint-stock companies.
What is the general minimum wage used to supplement individuals with pensions lower than this amount?
VND 435,000/month if retiring alone, or equal to the general minimum wage set by the Government at the time of retirement.
When does this Circular take effect?
This Circular takes effect from October 15, 2004.
How are workers from dissolved agencies or units and declared bankrupt entitled to a pension?
They are entitled to a pension based on their previous salary level and adjusted by an additional 10%.
What requirements must State-owned enterprises converted to joint-stock companies fulfill so that workers can have their average monthly salary paid for social insurance contributions calculated?
Implement the wage scale and salary table prescribed by the State and register with the provincial or centrally-administered city labor management agency; implement wage grade adjustment, promotion, and increase according to State regulations; pay social insurance based on the prescribed salary level.
Full text
CIRCULAR
Supplementary Guidelines for Circular No. 11/2005/TT-BLDTBXH dated January 5, 2005
concerning adjustments to pension and social insurance benefits
Implementing Decree No. 208/2004/NĐ-CP dated December 14, 2004 of the Government on adjustments to pensions and social insurance benefits, after receiving opinions from the Ministry of National Defense, the Ministry of Public Security, the Ministry of Finance, the Ministry of Home Affairs, and the Vietnam General Confederation of Labor, the Ministry of Labor - Invalids and Social Affairs supplements certain points of Circular No. 11/2005/TT-BLDTBXH dated January 5, 2005 on adjustments to pensions and social insurance benefits (hereinafter referred to as Circular No. 11/2005) as follows:
I. SUPPLEMENTING SUBPARAGRAPH A POINT 2 SECTION II OF CIRCULAR NO. 11/2005 ON THE METHOD FOR CALCULATING THE AVERAGE MONTHLY WAGE USED AS THE BASIS FOR SOCIAL INSURANCE CONTRIBUTIONS, APPLICABLE TO PERSONS RETIRING FROM OCTOBER 1, 2004 ONWARDS
1. For military personnel transferring to civilian jobs; public security officers transferring to work at Party, State, and mass organizations outside the armed forces; civil servants in confidential positions transferring to civilian jobs, who fall within the scope of taking the average monthly wage for five years prior to transfer according to point b, Clause 5, Article 6 of Decree No. 04/2001/NĐ-CP dated January 16, 2001 of the Government; point 3, Clause 6, Article 1 of Decree No. 89/2003/NĐ-CP dated August 5, 2003 of the Government; point b, Clause 4, Article 6 of Decree No. 102/2004/NĐ-CP dated February 27, 2004 of the Government, or public security officers falling within the scope of calculating the average monthly wage over ten years of social insurance contributions according to point 4, Clause 6, Article 1 of Decree No. 89/2003/NĐ-CP dated August 5, 2003 of the Government, the average monthly wage for social insurance contributions used as the basis for calculating retirement pensions and lump-sum benefits upon retirement shall be calculated as follows:
a) The period of social insurance contributions before October 2004, the monthly wage for social insurance contributions shall be calculated according to Article 3 and Clause 1, Article 5 of Decree No. 25/CP dated May 23, 1993 of the Government;
b) The period of social insurance contributions from October 2004 onwards, the monthly wage for social insurance contributions shall be calculated according to Articles 3, 4, 5, 6, 7, and 8 of Decree No. 204/2004/NĐ-CP dated December 14, 2004 of the Government;
c) The wages specified in subparagaphs a and b above shall be calculated based on the coefficients of the salary levels multiplied by the general minimum wage set by the Government at the time of retirement.
Example 1: Comrade Nguyen Van A, Major, battalion commander, enlisted in February 1970, transferred to civilian job in December 2004, retired in May 2005, falls within the category of persons whose average monthly wage for social insurance contributions in the last year before transfer is used to calculate the pension, with the following wage contributions in the last five years before transfer:
- From December 1999 to August 2001 (21 months), Lieutenant Colonel with old salary coefficient 4.8; seniority allowance 31%; leadership position allowance 0.5.
- From September 2001 to September 2004 (37 months), Colonel with old salary coefficient 5.3; seniority allowance 34%; leadership position allowance 0.5.
- From October 2004 to November 2004 (2 months), Colonel, reclassified with new salary coefficient 6.6; leadership position allowance 0.7; seniority allowance 34% (based on coefficient 6.6 + 0.7).
The method for calculating the average monthly wage for social insurance contributions used as the basis for calculating the retirement pension of Comrade A is as follows:
- From December 1999 to August 2001
{(290,000 x (4.8 + 0.5) + 290,000 x 4.8 x 0.31)} x 21 months = 41,338,920 dong;
- From September 2001 to September 2004:
{(290,000 x (5.3 + 0.5) + 290,000 x 5.3 x 0.34)} x 37 months = 81,569,460 dong;
- From October 2004 to November 2004:
{(290,000 x (6.6 + 0.7) x 1.34)} x 2 months = 5,673,560 dong;
- Total monthly wage contributions for social insurance in the last five years before transfer:
41,338,920 dong + 81,569,460 dong + 5,673,560 dong = 128,581,940 dong
Average monthly wage for social insurance contributions in the last five years before transfer:
128,581,940 dong ÷ 60 months = 2,143,032 dong/month.
Comrade A retired in May 2005, his pension was adjusted with an additional increase of 9% corresponding to the month of transfer (December 2004) as follows:
|
Pension in May 2005 |
= |
2,143,032 dong |
x |
75% |
x |
1,09 |
= |
1,751,929 dong |
2. For military personnel and civil servants in confidential positions transferring to civilian jobs who fall within the scope of adding the seniority allowance before transfer to calculate the average monthly wage for social insurance contributions in the last five years before retirement according to point a, Clause 5, Article 6 of Decree No. 04/2001/NĐ-CP dated January 16, 2001 of the Government and point a, Clause 4, Article 6 of Decree No. 102/2004/NĐ-CP dated February 27, 2004 of the Government, the seniority allowance is calculated based on the wage level before transfer as follows:
a) For those transferring before October 1, 2004, the seniority allowance is calculated based on the rank-based salary levels stipulated in Clause 1, Article 5 of Decree No. 25/CP dated May 23, 1993 of the Government.
b) For those transferring after October 1, 2004, the seniority allowance is calculated based on the rank-based salary levels, leadership position allowances, and seniority allowances exceeding the ceiling (if applicable) stipulated in subparagaph a, Clause 8, Article 6 of Decree No. 204/2004/NĐ-CP dated December 14, 2004 of the Government.
c) The wage level for calculating the seniority allowance stipulated in subparagaphs a and b above is calculated based on the salary coefficient multiplied by the general minimum wage set by the Government at the time of retirement.
Example 2: Comrade Nguyen Van B, Captain, company commander, enlisted in February 1968, transferred to civilian job in August 1983, retired in May 2005, has an average monthly wage for social insurance contributions in the last five years before retirement of 2,500,000 dong. Comrade B falls within the scope of adding the military seniority allowance before transfer to calculate the pension. The average monthly wage for social insurance contributions used as the basis for calculating the pension is as follows:
- The military seniority allowance before transfer is calculated based on the wage level stipulated in Clause 1, Article 5 of Decree No. 25/CP dated May 23, 1993 of the Government:
290,000 dong x 4.15 x 15% = 180,525 dong.
- The average monthly salary for social insurance contributions to serve as the basis for calculating retirement pay:
2,500,000 VND + 180,525 VND = 2,680,525 VND/month.
Example 3: Comrade Nguyen Van C, Major, has 30 years of military service, transferred to another sector in November 2004, retired in July 2005, with an average monthly salary for social insurance contributions over the last five years before retirement being 2,800,000 VND. Comrade C is eligible for additional seniority allowance from military service prior to transferring sectors, the average monthly salary for social insurance contributions to serve as the basis for calculating retirement pay is as follows:
- The seniority allowance from military service prior to transferring sectors is calculated based on the salary level prescribed in Decree No. 204/2004/NĐ-CP dated December 14, 2004 of the Government:
290,000 VND/month x 6.6 x 30% = 574,200 VND/month
- The average monthly salary for social insurance contributions to serve as the basis for calculating retirement pay:
2,800,000 VND + 574,200 VND = 3,374,200 VND/month.
3. For individuals eligible to take the average monthly salary for social insurance contributions over the five consecutive highest years working in heavy, hazardous, or dangerous jobs as the basis for calculating retirement pay according to Clause 6 Article 1 of Decree No. 01/2003/NĐ-CP dated January 9, 2003 and Point 2 Clause 6 Article 1 of Decree No. 89/2003/NĐ-CP dated August 5, 2003 of the Government, the average monthly salary for social insurance contributions to serve as the basis for calculating retirement pay and one-time pension upon retirement shall be calculated as follows:
a) Time contributing to social insurance before October 2004, the monthly salary for social insurance contributions shall be calculated according to Article 3 of Decree No. 26/CP dated May 23, 1993 of the Government.
b) Time contributing to social insurance from October 2004 onwards, the monthly salary for social insurance contributions shall be calculated according to Articles 3, 4, 5, and 6 of Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government.
c) The monthly salary for social insurance contributions stipulated in sub-clause a and b above shall be calculated based on the salary coefficient multiplied by the minimum wage set by the Government at the time of retirement.
Example 4: Mr. Nguyen Van D, a worker who has contributed to social insurance for 5 years, including 15 years of work and social insurance contributions at the wage level of heavy, hazardous, or dangerous jobs; retired in February 2005. During his employment, Mr. D had a period of 5 years (from December 1999 to November 2004) receiving wages higher than the wage level before retirement due to heavy, hazardous, or dangerous jobs. Mr. D's monthly salary for social insurance contributions during the 5 years working in heavy, hazardous, or dangerous jobs is as follows:
- From December 1999 to November 2000 (12 months), working in heavy, hazardous, or dangerous jobs with a mechanical salary coefficient of 2.49.
- From December 2000 to November 2002 (24 months), working in heavy, hazardous, or dangerous jobs with a mechanical salary coefficient of 3.05.
- From December 2002 to September 2004 (22 months), working in heavy, hazardous, or dangerous jobs with a mechanical salary coefficient of 3.73.
- From October 2004 to November 2004 (2 months), working in heavy, hazardous, or dangerous jobs with a mechanical salary coefficient of 4.80.
Calculation of the average monthly salary for social insurance contributions serving as the basis for calculating retirement pay for Mr. D is as follows:
- From December 1999 to November 2000:
290,000 VND x 2.49 x 12 months = 8,665,200 VND;
- From December 2000 to November 2002:
290,000 VND x 3.05 x 24 months = 21,228,000 VND;
- From December 2002 to September 2004:
290,000 VND x 3.73 x 22 months = 23,797,400 VND;
- From October 2004 to November 2004:
290,000 VND x 4.80 x 2 months = 2,784,000 VND;
- Total monthly salary for social insurance contributions over the five consecutive highest years working in heavy, hazardous, or dangerous jobs is:
8,665,200 VND + 21,228,000 VND + 23,797,400 VND + 2,784,000 VND = 56,474,600 VND
- The average monthly salary for social insurance contributions is:
56,474,600 VND ÷ 60 months = 941,243 VND/month
4. For individuals who have worked abroad as experts and are eligible for a salary increase upon retirement according to Circular No. 02/LĐTBXH-TT dated February 11, 1998 of the Ministry of Labor, Invalids, and Social Affairs, the average monthly salary for social insurance contributions over the last five years to serve as the basis for calculating retirement pay shall be implemented as follows:
a) Time contributing to social insurance before October 2004, calculate the monthly salary for social insurance contributions according to Article 3 and Clause 1 Article 5 of Decree No. 25/CP dated May 23, 1993 of the Government;
b) Time contributing to social insurance from October 2004 until retirement, calculate the monthly salary for social insurance contributions according to Articles 3, 4, 5, 6, 7, and 8 of Decree No. 204/2004/NĐ-CP dated December 14, 2004 of the Government.
c) The salary level stipulated in sub-clause a and b above shall be calculated based on the salary coefficient multiplied by the minimum wage set by the Government at the time of retirement.
Example 5: Mr. Nguyen Van K, a state employee sent abroad as an expert from April 1991, returned to Vietnam in November 1994 with a salary coefficient of 3.91, and the salary progression until retirement was as follows: November 1997 with a salary coefficient of 4.19, November 2000 with a salary coefficient of 4.47, November 2003 with a salary coefficient of 4.75, October 2004 switched to a new salary coefficient of 6.10, retired in August 2005.
Mr. K has three years of overseas expert experience, thus he is eligible for a one-level salary increase from 6.10 to 6.44 to serve as the basis for calculating retirement pay. According to Circular No. 02/LĐTBXH-TT dated February 11, 1998, when calculating the average monthly salary for social insurance contributions, the new increased salary is used as the basis for calculating the average of the last three years and the adjacent salary for calculating the average of the two preceding years, specifically as follows:
- Monthly salary for social insurance contributions from August 2000 to July 2002 (2 years) calculated based on the salary coefficient of 4.75:
290,000 VND x 4.75 x 24 months = 33,060,000 VND.
- Monthly salary for social insurance contributions from August 2002 to July 2005 (the last 3 years):
+ From August 2002 to September 2004, calculated based on the salary coefficient of 5.03 (new increased salary according to Decree No. 25/CP):
290,000 VND x 5.03 x 26 months = 37,926,200 VND.
+ From October 2004 to July 2005, calculated based on the salary coefficient of 6.44 (converted from the salary coefficient of 5.03 to the new salary level prescribed in Decree No. 204/2004/NĐ-CP):
290,000 VND x 6.44 x 10 months = 18,676,000 VND.
- Total monthly salary for social insurance contributions over the last 5 years:
33,060,000 VND + 37,926,200 VND + 18,676,000 VND = 89,662,200 VND - Average monthly social insurance contribution salary for calculating pension:
89,662,200 VND ÷ 60 months = 1,494,370 VND/month
5. For employees working under various types of labor contracts as stipulated in the Labor Code at State-owned Companies that have been converted to Joint Stock Companies; State Capital Limited Liability Companies; State Capital Limited Liability Companies with two or more members, when retiring, they shall take the average monthly social insurance contribution salary of the last five years as the basis for calculating their pension if the Company fully implements the following provisions:
a) Applying the wage scale and pay grade prescribed by the State and registered with the provincial or centrally-administered municipal labor management agency in accordance with Decree No. 114/2002/NĐ-CP dated December 31, 2002 of the Government detailing and guiding the implementation of certain provisions of the Labor Code on wages;
b) Implementing wage adjustments, promotions, and increments according to State regulations for State-owned Companies based on the wage scale and pay grade applied in sub-clause a above;
c) Contributing to social insurance based on the wage level specified in sub-clauses a and b above.
In case the Company does not fully implement the above provisions, when retiring, employees shall calculate the average monthly social insurance contribution salary for pension calculation in accordance with Clause 2, Article 29 of the Social Insurance Regulations issued together with Decree No. 12/CP dated January 26, 1995 of the Government.
II. SUPPLEMENTING SUB-POINT B POINT 2 SECTION II CIRCULAR NO. 11/2005
After adjusting the pension amount in accordance with Sub-point b Point 2 Section II Circular No. 11/2005, for those whose pension is lower than the general minimum wage, they shall be compensated up to the general minimum wage as prescribed by the Government at the time of retirement; for those who retire and live alone, after adjustment, if their pension is less than 435,000 VND/month, they shall be compensated up to 435,000 VND/month.
III. SUPPLEMENTING POINT 3 SECTION III CIRCULAR NO. 11/2005
In cases where the former agency or unit has been dissolved and there is a bankruptcy declaration decision made by the People's Court with jurisdiction as stipulated in Article 7 of the Bankruptcy Law dated June 15, 2004, and the employee has not been assigned a new wage grade, then the calculation of the pension for employees meeting the conditions for retirement shall be based on the old wage level and increased by 10% of the pension.
IV. IMPLEMENTATION.
This Circular shall take effect 15 days after its publication in the Official Gazette. The provisions of this Circular shall apply from October 1, 2004.
During the implementation process, if there are any difficulties, please report them to the Ministry of Labor, Invalids, and Social Affairs for study and resolution./.
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