Salary paid for social insurance in Vietnam

Social insurance is the right of employees to be guaranteed to compensate part of their income in certain circumstances. When participating in social insurance, the salary paid for social insurance in Vietnam is an issue that many workers and businesses are concerned about. In this article, Viet An Law will present more clearly the latest salary paid for social insurance in Vietnam.

Legal basis

• Labor Code 2019;
• Law on Social Insurance 2014;
• Decree 115/2015/ND-CP detailing a number of articles of the Law on Social Insurance regarding compulsory social insurance, as amended and supplemented by Decree 89/2020/ND-CP and Decree 135/2020/ND-CP;
• Decree 24/2023/ND-CP regulates the base salary for officials, civil servants, public employees, and the armed forces;
• Circular 10/2020/TT-BLDTBXH on detailed regulations and instructions for implementing a number of articles of the Labor Code;
• Circular 59/2015/TT-BLDTBXH details and guides the implementation of a number of articles of the Law on Social Insurance regarding compulsory social insurance, amended and supplemented by Circular 06/2021/TT-BLDTBXH.
• Decision 595/QD-BHXH promulgates the process of collecting social insurance, health insurance, unemployment insurance, labor accident, and occupational disease insurance, most recently amended by Decision 948/QD-BHXH.

What is social insurance?

Social insurance means the guarantee to fully or partially offset an employee’s income that is reduced or lost due to his/her sickness, maternity, occupational accident, occupational disease, retirement or death, on the basis of his/her contributions to the social insurance fund. Social insurance is divided into two types:

• Compulsory social insurance means a form of social insurance organized by the State in which employees and employers are required to participate.
• Voluntary social insurance means a form of social insurance organized by the State in which a participant may select a premium rate and a method of premium payment suitable to his/her income and the State supports his/her payment of social insurance premiums for him/her to enjoy retirement and survivorship allowance benefits.

Depending on each type of social insurance, the benefits included will also be different. For example, voluntary social insurance will not cover sickness, maternity, work accidents, or occupational diseases like compulsory social insurance.

Regulations on social insurance salaries of employees

Regulations on the monthly salary of employees for compulsory social insurance payment are specifically stipulated in Article 89 of the Law on Social Insurance and in Article 17 of Decree 115/2015/ND-CP.

Accordingly, the monthly salary that employees use to pay compulsory social insurance will be divided into the cases listed below:

• In cases where employees who pay social insurance belong to the subjects who comply with the salary regime prescribed by the State;
• In cases where employees who pay social insurance are dependent on the salary regime decided by the employer;

Paying social insurance is the right of the employee and the obligation of the employer according to the Law on Social Insurance.

Determine monthly salary for calculating compulsory social insurance

Pursuant to Clause 2, Article 5 of the Law on Social Insurance, it is stipulated that the compulsory social insurance payment rate is calculated on the basis of the monthly salary of employees.

According to Clause 2, Article 89 of the 2014 Law on Social Insurance, the monthly salary for compulsory insurance payment includes:

• Salary;
• Allowance;
• Other additional amounts as prescribed by labor law.

According to Clause 26, Article 1 of Circular 06/2021/TT-BLDTBXH, the monthly salary base for paying compulsory social insurance does not include:

• Other benefits and benefits such as bonuses as prescribed in Article 104 of the Labor Code;
• Initiative bonus;
• Mid-shift meal;
• Subsidies for gasoline, telephone, transportation, housing, and childcare;
• Support when employees have relatives who die, employees whose relatives get married, employees’ birthdays, allowances for employees facing difficult circumstances when suffering from work accidents, occupational diseases;
• Other supports and allowances are recorded in a separate section in the labor contract, specifically the section “Other additional payments whose specific amount cannot be determined as agreed by both parties, paid regularly or irregularly during the period of each salary payment period is associated with the working process and results of the employee’s work performance” (according to item c2, point c, clause 5, Article 3 of Circular No. 10/2020/TT-BLDTBXH).

For employees who are Vietnamese citizens, they are subject to compulsory social insurance

The contribution level is deducted from the monthly salary and is distributed as follows:

• 3% to the sickness and maternity fund;
• 14% goes to retirement and death fund.

Note that you do not have to pay compulsory social insurance

• Employees who do not work and do not receive a salary for 14 working days or more in a month are not required to pay social insurance that month.
• This time is not counted for social insurance benefits, except in the case of maternity leave.

For voluntary social insurance participants who are Vietnamese citizens aged 15 years or older and are not above subjects.

• The monthly contribution rate is equal to 22% of the monthly income chosen by the employee to contribute to the retirement and death fund.
• The lowest monthly income as a basis for paying social insurance is equal to the poverty standard for rural areas and the highest is 20 times the standard salary.

Minimum compulsory social insurance monthly salary

According to the provisions of Point 2.6, Clause 2, Article 6 of Decision 595/QD-BHXH dated April 14, 2017, the minimum salary for compulsory social insurance payment is for employees doing the simplest job or title. Under normal working conditions, the monthly salary paid for compulsory social insurance is not lower than the regional minimum salary at the time of payment.

According to the provisions of Decree 38/2022/ND-CP currently in effect, the monthly regional minimum wage is determined as follows:

In fact, many businesses are paying the minimum monthly compulsory social insurance, so adjusting the regional minimum wage will lead to an increase in the compulsory social insurance payment.

Maximum monthly salary for compulsory social insurance

The maximum monthly salary for compulsory social insurance payment according to the provisions of Clause 3, Article 6 of Decision 595/QD-BHXH will be 20 months’ standard salary.

According to the current regulations of Decree 24/2023/ND-CP, the base salary from July 1, 2023, is 1,800,000 VND/month. Accordingly, the base salary is divided into two stages with two applicable levels as follows:

Thus, the maximum monthly salary for compulsory social insurance from July 1, 2023, to December 31, 2023, is 20 x 1.8 = 36 million VND/month.

Receive one-time social insurance when leaving work for foreign workers

According to Clause 2, Article 17 of Decree 143/2018/ND-CP, the one-time social insurance regime for foreign workers will be applied.

Therefore, based on Clause 6, Article 9 of Decree 143/2018/ND-CP, foreign workers participating in social insurance will be entitled to one-time social insurance upon request if they fall into one of the following cases: after:

• Enough age to enjoy pension but not yet 20 years of paying social insurance.
• Suffering from life-threatening diseases such as: Cancer, polio, cirrhosis, ascites, leprosy, severe tuberculosis, HIV infection that has turned into AIDS and other diseases according to regulations of the Ministry of Health.
• Eligible for pension but do not continue to reside in Vietnam.
• The labor contract is terminated or the work permit, practice certificate, or practice license expires without being renewed.

Therefore, if after terminating the labor contract there is a need to withdraw one-time social insurance, the foreign worker can apply for benefits according to regulations.

Time of paying social insurance to retire

According to previous regulations, male workers needed to pay social insurance for 35 years and female workers needed to pay for 30 years to receive the maximum pension. According to Article 56 and Article 74 of the Law on Social Insurance, the number of years of social insurance payment to receive a pension for male workers will change.

The time limit for paying social insurance to enjoy the highest pension for male workers:

• For male workers, to enjoy a minimum pension of 45%, they need to pay 20 years of social insurance, an increase of one year compared to the old regulation of 19 years.
• After that, for each year of social insurance payment, the employee’s pension is calculated by 2%, and the maximum level is 75%.
• Thus, from 2023, to enjoy a maximum pension of 75%, male workers need to pay in full for 35 years.

Time limit for paying social insurance to enjoy the highest pension for female workers:

• For female employees, the monthly pension is calculated at 45% of the average monthly salary paid for social insurance and corresponds to 15 years of social insurance payment.
• Similar to male employees, then for each year of social insurance payment, the female employee’s pension is calculated by 2% and the maximum level is 75%. To enjoy a maximum pension of 75%, female employees need to pay 30 years of social insurance.
• Thus, from 2023, male workers need to pay social insurance for 35 years and female workers need to pay 30 years to receive the maximum pension.

Retirement age from 2023

Under Article 4.2 Decree 135/2020/ND-CP, the retirement age for employees working under normal conditions will change as follows:

• Male workers: From 60 years and 09 months (Increase 03 months compared to 2022).
• Female workers: From 56 years old (4 months increase compared to 2022).

Latest voluntary social insurance payment rates

From July 1, 2023, the base salary is 1.8 million VND/month (before June 30, 2023, it is 1.49 million VND/month), accordingly, the maximum voluntary social insurance payment is equal to 22% of the salary. 20 times the base salary and divided into 2 timelines as follows:

• The maximum voluntary social insurance payment before June 30, 2023, is 22% x (20 x 1,490,000) = 6,556,000 VND/person/month.
• The maximum voluntary social insurance payment from July 1, 2023, is 22% x (20 x 1,800,000) = 7,920,000 VND/person/month.

If you need advice related to the salary paid for social insurance in Vietnam and using social insurance declaration services, please contact Viet An Luat for detailed support!