Circular No. 26/2005/TT-BLDTBXH guiding the adjustment of pension and social insurance benefits according to Government Decree No. 117/2005/NĐ-CP dated September 15, 2005.

CIRCULAR

Guidelines for adjusting pensions and social insurance benefits

pursuant to Decree No. 117/2005/ND-CP dated September 15, 2005 of the Government

Pursuant to Decree No. 117/2005/ND-CP dated September 15, 2005 of the Government on the adjustment of pensions and social insurance benefits, the Ministry of Labor - Invalids and Social Affairs guides the adjustment of pensions and social insurance benefits as follows:

I. APPLICABLE OBJECTS

1. Officials, civil servants, workers, employees; military personnel, police officers, people engaged in confidential work receiving monthly pensions according to the salary scale and table prescribed by the State.

2. Workers, employees, and laborers receiving monthly pensions who have both periods of time earning salaries according to the salary scale and table prescribed by the State and periods of time earning salaries not according to the salary scale and table prescribed by the State.

3. Workers and employees currently receiving monthly disability allowances, including those receiving monthly allowances under Decision No. 91/2000/QĐ-TTg dated August 4, 2000 of the Prime Minister.

4. Rubber plantation workers currently receiving monthly allowances.

5. Village, ward, and town officials currently receiving pensions and monthly allowances as stipulated in Decree No. 121/2003/ND-CP dated October 21, 2003 and Decree No. 09/1998/ND-CP dated January 23, 1998 of the Government.

II. ADJUSTMENT OF PENSIONS AND SOCIAL INSURANCE BENEFITS

1. The subjects specified in Section I of this Circular who received pensions and monthly allowances before October 1, 2005 shall have their pensions and monthly allowances adjusted as follows:

a) 1.10 shall be applied to adjust pensions and social insurance benefits for the following categories:

- Officials, civil servants, workers, and employees with a pre-retirement salary below 390 dong/month according to Decree No. 235/HĐBT dated September 18, 1985; having an old salary coefficient below 3.06 according to Decree No. 25/CP and Decree No. 26/CP dated May 23, 1993; having a new salary coefficient below 3.99 according to Resolution No. 730/2004/NQ-UBTVQHK11 dated September 30, 2004, Decision No. 128/QĐ-TW dated December 14, 2004, Decree No. 204/2004/ND-CP and Decree No. 205/2004/ND-CP dated December 14, 2004.

- Military personnel, police officers, and people engaged in confidential work receiving salaries according to the rank pay table for officers of the People's Army; officers and non-commissioned officers of the People's Police and the professional military rank pay table belonging to the People's Army and technical staff belonging to the People's Police with a pre-retirement salary below 425 dong/month according to Decree No. 235/HĐBT dated September 18, 1985; having an old salary coefficient below 4.4 according to Decree No. 25/CP dated May 23, 1993; having a new salary coefficient below 5.6 according to Decree No. 204/2004/ND-CP dated December 14, 2004.

- The categories specified in Clause 3, Clause 4, and Clause 5 of Section I of this Circular.

b) 1.08 shall be applied to adjust pensions for the following categories:

- Officials, civil servants, workers, and employees with a pre-retirement salary of 390 dong/month or more according to Decree No. 235/HĐBT dated September 18, 1985; having an old salary coefficient of 3.06 or more according to Decree No. 25/CP and Decree No. 26/CP dated May 23, 1993; having a new salary coefficient of 3.99 or more according to Resolution No. 730/2004/NQ-UBTVQHK11 dated September 30, 2004, Decision No. 128/QĐ-TW dated December 14, 2004, Decree No. 204/2004/ND-CP and Decree No. 205/2004/ND-CP dated December 14, 2004.

- Military personnel, police officers, and people engaged in confidential work receiving salaries according to the rank pay table for officers of the People's Army; officers and non-commissioned officers of the People's Police and the professional military rank pay table belonging to the People's Army and technical staff belonging to the People's Police with a pre-retirement salary of 425 dong/month or more according to Decree No. 235/HĐBT dated September 18, 1985; having an old salary coefficient of 4.4 or more according to Decree No. 25/CP dated May 23, 1993; having a new salary coefficient of 5.6 or more according to Decree No. 204/2004/ND-CP dated December 14, 2004.

Example 1: Mr. Nguyen Van A, with a pre-retirement salary according to Decree No. 235/HĐBT of 359 dong/month, had a pension of 750,000 dong/month in September 2005.

Mr. A's pension from October 2005 is:

750,000 dong/month x 1.10 = 825,000 dong/month

Example 2: Mr. Nguyen Van B, with the rank of Major, had a pre-retirement salary coefficient according to Decree No. 25/CP of 4.8, and a pension of 1,150,000 dong/month in September 2005.

Mr. B's pension from October 2005 is:

1,150,000 dong/month x 1.08 = 1,242,000 dong/month

Example 3: Mr. Vu Van E, a retired village official, receives monthly allowances according to Decree No. 09/1998/ND-CP, with a benefit of 297,000 dong/month in September 2005.

Mr. E's allowance from October 2005 is:

297,000 dong/month x 1.10 = 326,700 dong/month

2. For the subjects specified in Clause 1 of Section I of this Circular, who retire from October 1, 2005 to September 30, 2006, their pensions will be adjusted as follows:

a) The average monthly salary used as the basis for social insurance contributions in the last five years before retirement, calculated according to the provisions at point a, Clause 2, Section II of Circular No. 11/2005/TT-BLDTBXH dated January 5, 2005, and Section I of Circular No. 21/2005/TT-BLDTBXH dated August 9, 2005.

Specifically, for those working in state-owned companies that have been converted into joint-stock companies; wholly state-owned limited liability companies; state-owned limited liability companies with two or more shareholders, if they fully comply with the provisions at points a, b, and c, Clause 5, Section I of Circular No. 21/2005/TT-BLDTBXH, when retiring, they can use the average monthly salary for social insurance contributions in the last five years as the basis for calculating their pension.

b) Those retiring from October 1, 2005 to September 30, 2006, their pensions will be adjusted as follows:

In which, the pension adjustment amount corresponding to the month of retirement from October 1, 2005 to September 30, 2006 is calculated according to the provisions in Table 1 below:

Table 1

Example 4: Mr. Nguyen Van D, with 30 years of social insurance contributions, retired in January 2006. The salary progression for the last five years before retirement is as follows:

- From January 2001 to December 2003 (36 months), the old salary coefficient was 3.31;

- From January 2004 to September 2004 (9 months), the old salary coefficient was 3.56;

- From October 2004 to December 2005 (15 months), the new salary coefficient was 4.65.

According to the above salary progression, the average monthly salary for the last five years for social insurance contributions is calculated as follows:

+ From January 2001 to December 2003:

350,000 VND x 3.31 x 36 months = 41,706,000 VND

+ From January 2004 to September 2004:

350,000 VND x 3.56 x 9 months = 11,214,000 VND

+ From October 2004 to December 2005:

350,000 VND x 4.65 x 15 months = 24,412,500 VND

+ The total salary for the last five years serving as the basis for social insurance contributions is:

41,706,000 VND + 11,214,000 VND + 24,412,500 VND = 77,332,500 VND

+ The average monthly salary for social insurance contributions:

77,332,500 VND ÷ 60 months = 1,288,875 VND/month

- The unadjusted pension amount is:

75% x 1,288,875 VND/month = 966,656 VND/month

- Mr. D retired in January 2006 with the adjusted pension amount being:

966,656 VND/month + (966,656 VND/month x 12.5%)

= 1,087,488 VND/month

Example 5: Mr. Ngo Quang H joined military service in March 1973, held the rank of Major, and retired in June 2006. The salary progression for the last five years before retirement for social insurance contributions is as follows:

- From June 2001 to September 2003 (28 months), rank of Lieutenant Colonel, old salary coefficient was 4.80, seniority allowance was 30%;

- From October 2003 to September 2004 (12 months), rank of Colonel, old salary coefficient was 5.30, seniority allowance was 31%;

- From October 2004 to May 2006 (20 months), rank of Colonel, new salary coefficient was 6.60, seniority allowance was 33%.

According to the above salary progression, the average monthly salary for the last five years for social insurance contributions is calculated as follows:

+ From June 2001 to September 2003:

350,000 VND x 4.80 x 1.30 x 28 months = 61,152,000 VND;

+ From October 2003 to September 2004:

350,000 VND x 5.30 x 1.31 x 12 months = 29,160,600 VND;

+ From October 2004 to May 2006:

350,000 VND x 6.60 x 1.33 x 20 months = 61,446,000 VND;

The total salary for the last five years serving as the basis for social insurance contributions is:

61,152,000 VND + 29,160,600 VND + 61,446,000 VND = 151,758,600 VND

+ The average monthly salary for social insurance contributions is:

151,758,600 VND ÷ 60 months = 2,529,310 VND/month

- The unadjusted pension amount is:

75% x 2,529,310 VND = 1,896,983 VND/month.

- Mr. H retired in June 2006 with the adjusted pension amount being:

1,896,983 VND/month + (1,896,983 VND/month x 10%)

= 2,086,681 VND/month

3. For subjects defined in Clause 2 Section I of this Circular, who have both periods of receiving salaries according to state-prescribed salary scales and periods of receiving salaries not according to state-prescribed salary scales, their pensions shall be adjusted as follows:

a) For those retiring before October 2005:

Where:

+ 1.10 applies to adjust the portion of the pension based on salaries according to state-prescribed salary scales for subjects defined at point a Clause 1 Section of this item;

+ 1.08 applies to adjust the portion of the pension based on salaries according to state-prescribed salary scales for subjects defined at point b Clause 1 Section of this item.

Example 6: Mr. Le Van M worked in the public sector with a salary coefficient of 3.31, then transferred to work at a joint venture company.

Mr. M retired in August 2000, with the pension he was receiving in September 2005 being 1,296,048 VND/month, of which the portion based on state-prescribed salary scales was 691,548 VND/month, and the portion not based on state-prescribed salary scales was 604,500 VND/month.

According to the above provisions, Mr. M has an adjustment factor of 1.08, and his pension from October 2005 onwards is:

(691,548 VND/month x 1.08) + 604,500 VND/month

= 1,351,372 VND/month

b) For those retiring from October 1, 2005 to September 30, 2006:

According to the above calculation method, the level of pension adjustment for the part of the pension calculated based on the state-prescribed salary scale and wage list shall be as follows:

- For those who switched to receiving a salary not according to the state-prescribed salary scale and wage list before October 1, 2004, both the 10% adjustment rate as stipulated in point b, Clause 3, Section II of Circular No. 11/2005/TT-BLDTBXH and the 10% or 8% adjustment rate as stipulated in Clause 1, Section II of this Circular shall be applied simultaneously.

Example 7: Mr. Tran Quang T worked in the public sector with a salary coefficient under Decree No. 25/CP of 4.19, then transferred to work at an international organization from April 2003.

In December 2005, Mr. T retired with an unadjusted pension of 1,750,000 VND/month, of which the part of the pension calculated according to the state-prescribed salary scale and wage list was 850,000 VND/month, and the part of the pension calculated not according to the state-prescribed salary scale and wage list was 900,000 VND/month.

According to the above regulations, Mr. T's pension from December 2005 is:

- The part of the pension calculated not according to the state-prescribed salary scale and wage list is 900,000 VND/month.

- The part of the pension calculated according to the state-prescribed salary scale and wage list is adjusted as follows:

+ Adjusted by 10% as stipulated in point b, Clause 3, Section II of Circular No. 11/2005/TT-BLDTBXH:

850,000 VND/month + (850,000 VND/month x 10%) = 935,000 VND/month

+ Adjusted by 8% as stipulated in Clause 1, Section II of this Circular:

935,000 VND/month + (935,000 VND/month x 8%) = 1,009,800 VND/month

- Mr. T's pension from December 2005 is:

1,009,800 VND/month + 900,000 VND/month = 1,909,800 VND/month

- For those who switched to receiving a salary not according to the state-prescribed salary scale and wage list from October 1, 2004 to September 30, 2005, both the adjustment rate as stipulated in Table 2, point b, Clause 3, Section II of Circular No. 11/2005/TT-BLDTBXH and the 10% or 8% adjustment rate as stipulated in Clause 1, Section II of this Circular shall be applied simultaneously.

Example 8: Mr. Nguyen Van S worked in the public sector with a salary coefficient under Decree No. 204/2004/NĐ-CP of 4.74, then transferred to work at a joint venture company with foreign investment from December 2004.

In July 2006, Mr. S retired with an unadjusted pension of 1,550,000 VND/month, of which the part of the pension calculated according to the state-prescribed salary scale and wage list was 900,000 VND/month, and the part of the pension calculated not according to the state-prescribed salary scale and wage list was 650,000 VND/month.

According to the above regulations, Mr. S's pension from July 2006 is:

- The part of the pension calculated not according to the state-prescribed salary scale and wage list is 650,000 VND/month.

- The part of the pension calculated according to the state-prescribed salary scale and wage list is adjusted as follows:

+ Adjusted by 9% as stipulated in Table 2, point b, Clause 3, Section II of Circular No. 11/2005/TT-BLDTBXH:

900,000 VND/month + (900,000 VND/month x 9%) = 981,000 VND/month

+ Adjusted by 8% as stipulated in Clause 1, Section II of this Circular:

981,000 VND/month + (981,000 VND/month x 8%) = 1,059,480 VND/month

- Mr. S's pension from July 2006 is:

1,059,480 VND/month + 650,000 VND/month = 1,709,480 VND/month

- For those who switched to receiving a salary not according to the state-prescribed salary scale and wage list from October 1, 2005 to September 30, 2006, the adjustment rate as stipulated in Table 2 below shall be applied.

Table 2

Example 9: Mr. Nguyen Van G worked in a state-owned company with a salary coefficient under Decree No. 205/2004/NĐ-CP of 4.20, then transferred to a joint venture company with foreign investment from November 2005.

In September 2006, Mr. G retired with an unadjusted pension of 1,550,000 VND/month, of which the part of the pension calculated according to the state-prescribed salary scale and wage list was 950,000 VND/month, and the part of the pension calculated not according to the state-prescribed salary scale and wage list was 600,000 VND/month.

According to the above regulations, Mr. G's pension from September 2006 is:

- The part of the pension calculated not according to the state-prescribed salary scale and wage list is 600,000 VND/month.

- The part of the pension calculated according to the state-prescribed salary scale and wage list is adjusted as follows:

950,000 VND/month + (950,000 VND/month x 13.5%) = 1,078,250 VND/month

- Mr. G's pension from September 2006 is:

1,078,250 VND/month + 600,000 VND/month = 1,678,250 VND/month

4. Those who wait until they reach the retirement age and meet the conditions for retirement benefits from October 1, 2005 to September 30, 2006, their pensions will be adjusted as follows:

According to the above calculation method, the pension adjustment rates shall be applied as follows:

a) For those who waited until before October 1, 2004, both the 10% adjustment rate as stipulated in Clause 1, Section II of Circular No. 11/2005/TT-BLDTBXH and the 10% or 8% adjustment rate as stipulated in Clause 1, Section II of this Circular shall be applied simultaneously.

Example 10: Mr. Nguyen Van H waited until January 2003 to meet the retirement age to enjoy retirement benefits, with a salary coefficient before retirement under Decree No. 25/CP of 3.02. In December 2005, Mr. H met the conditions for retirement benefits with an unadjusted pension of 700,000 VND/month.

According to the above regulations, Mr. H's pension will be adjusted as follows:

+ Adjusted by 10% as stipulated in Clause 1, Section II of Circular No. 11/2005/TT-BLDTBXH:

700,000 VND/month + (700,000 VND/month x 10%) = 770,000 VND/month

+ Adjusted by 10% as stipulated in Clause 1, Section II of this Circular:

770,000 VND/month + (770,000 VND/month x 10%) = 847,000 VND/month

Mr. H's pension starting from December 2005 is 847,000 VND/month.

b) For those who waited from October 1, 2004 to September 30, 2005, both the adjustment rate as stipulated in Table 1, point b, Clause 2, Section II of Circular No. 11/2005/TT-BLDTBXH and the 10% or 8% adjustment rate as stipulated in Clause 1, Section II of this Circular shall be applied simultaneously.

Example 11: Mr. Tran Van K retired on waiting for the age to enjoy the pension benefit from December 2004, with the salary coefficient before retirement according to Decree No. 204/2004/NĐ-CP being 4.65. In December 2005, Mr. K met the conditions to enjoy the pension benefit, with the unadjusted pension salary being 850,000 VND/month.

According to the above regulations, Mr. K's pension salary was adjusted as follows:

+ Adjusted by 9% as stipulated in Table 1, point b, Clause 2, Section II of Circular No. 11/2005/TT-BLDTBXH:

850,000 VND/month + (850,000 VND/month x 9%) = 926,500 VND/month

+ Adjusted by 8% as stipulated in Clause 1, Section II of this Circular:

926,500 VND/month + (926,500 VND/month x 8%) = 1,000,620 VND/month

Mr. K's pension salary enjoyed from December 2005 is 1,000,620 VND/month.

c) For those who retired from October 1, 2005 to September 30, 2006, the adjustment of the pension salary shall be applied according to the provisions at Table 1, point b, Clause 2, Section II of this Circular.

Example 12: Mr. Phan Van P retired on waiting for the age to enjoy the pension benefit from December 2005, with the salary coefficient before retirement according to Decree No. 204/2004/NĐ-CP being 4.65. In May 2006, Mr. P met the conditions to enjoy the pension benefit with the unadjusted pension salary being 900,000 VND/month.

According to the above regulations, Mr. P's pension salary enjoyed from May 2006 is:

900,000 VND/month + (900,000 VND/month x 13%) = 1,017,000 VND/month

5. Those who stopped working and continued to pay social insurance contributions to enjoy social insurance benefits according to point d, Clause 3, Article 3 of Decree No. 41/2002/NĐ-CP and Clause 2, Article 5 of Decree No. 121/2003/NĐ-CP, retiring from October 1, 2005 to September 30, 2006, their pension salaries will be adjusted as follows:

a) For those who stopped working before October 1, 2004, and continued to pay social insurance contributions based on the old salary coefficient, their pension salaries will be adjusted according to the provisions at point a, Clause 4, Section of this item.

b) For those who stopped working from October 1, 2004 to September 30, 2005, and continued to pay social insurance contributions based on the new salary coefficient, their pension salaries will be adjusted according to the provisions at point b, Clause 4, Section of this item.

c) For those who stopped working from October 1, 2005 to September 30, 2006, and continued to pay social insurance contributions based on the new salary coefficient, their pension salaries will be adjusted according to the provisions at point c, Clause 4, Section of this item.

6. Those who have retained the time of social insurance contribution payment and meet the conditions to enjoy the pension benefit or receive a one-time social insurance allowance from October 1, 2005 to September 30, 2006, their pension salaries and one-time allowances will be applied as follows:

a) Those who retain the time of social insurance contribution payment based on the state-defined salary scale to enjoy the pension salary, the following adjustment levels apply:

- The adjustment level according to the provisions at point a, Clause 4, Section of this item for those who retain the time of social insurance contribution payment before October 1, 2004.

- The adjustment level according to the provisions at point b, Clause 4, Section of this item for those who retain the time of social insurance contribution payment from October 1, 2004 to September 30, 2005.

- The adjustment level according to the provisions at point c, Clause 4, Section of this item for those who retain the time of social insurance contribution payment from October 1, 2005 to September 30, 2006.

b) Those who retain the time of social insurance contribution payment both based on the state-defined salary scale and not based on the state-defined salary scale to enjoy the pension salary, the adjustment level according to the provisions at point b, Clause 3, Section of this item applies.

c) Those who receive a one-time social insurance allowance, the amount of the one-time allowance is calculated based on the average monthly salary used as the basis for paying social insurance contributions according to point a, Clause 2, Section of this item.

III. IMPLEMENTATION

1. The Ministry of Labor - War Invalids and Social Affairs shall coordinate with the Ministry of Finance, the Ministry of Defense, and the Ministry of Public Security to organize guidance and inspection of the implementation in accordance with the provisions of Decree No. 117/2005/NĐ-CP and this Circular.

2. People's Committees of provinces and centrally governed cities are responsible for directing the Department of Labor - War Invalids and Social Affairs and relevant agencies to implement the provisions of this Circular.

3. The Vietnam Social Security is responsible for implementing the adjustment of pension salaries and social insurance allowances according to the provisions of Government Decree No. 117/2005/NĐ-CP and this Circular, specifically:

- Implementing the adjustment of pension salaries and social insurance allowances and organizing timely, full, and correct payments according to regulations for those enjoying pension salaries and social insurance allowances.

- Propagating and explaining according to the provisions of Government Decree No. 117/2005/NĐ-CP and this Circular;

- Guiding, urging, and inspecting the social security system in organizing the implementation in accordance with the guidance provided in this Circular;

- Preparing reports according to the annex attached to this Circular and submitting them to the Ministry of Labor - War Invalids and Social Affairs and the Ministry of Finance.

4. Heads of agencies, ministries, sectors, organizations, Chairmen of Management Councils, General Directors, Directors of State-owned Corporations and companies are responsible for directing subordinate units to implement in accordance with the guidance provided in this Circular.

5. Additional funds due to the adjustment of pension salaries and social insurance allowances paid monthly to individuals covered by the State budget are guaranteed by the Ministry of Finance.

6. This Circular takes effect 15 days after its publication in the Official Gazette; the provisions regarding the adjustment of pension salaries and social insurance allowances in this Circular shall apply from October 1, 2005.

In the course of implementation, if there are difficulties, please reflect them to the Ministry of Labor, Invalids, and Social Affairs for research and resolution./.