Changing the way of calculating social insurance contributions: Ensuring fairness, aiming for sustainable social security

After more than 2 months of implementation, the Law on Social Insurance (SI) 2024 has gradually entered life with many new points. Notably, the "base salary" is replaced by a "reference level" and the basis for calculating the SI contribution level for employees is based on monthly income. This is expected to ensure the sustainability of the social security fund as well as change the mindset and responsibility of businesses and employees.

New basis for floor and ceiling levels of social insurance contributions

At the conference to accompany businesses in 2025 organized by Cau Ong Lanh Ward (HCMC) in early September, many issues related to the implementation of the Social Insurance Law 2024 were discussed by businesses, business households and leaders of the Social Insurance agency. From July 1, 2025, regulations on social insurance contributions will have major changes, such as the new social insurance contribution ceiling, new contribution rate...

HCM City Social Insurance staff pay pensions and social insurance benefits to beneficiaries. Photo: DONG SON

In addition to the basic salary, many businesses also pay additional support and benefits for employees such as: gasoline, phone bills, uniforms, accommodation, additional income... With the new calculation method, many businesses wonder whether these support payments are included in the mandatory social insurance payments for employees or not...

Mr. Tran Cong Thanh, a garment worker in Linh Xuan ward (HCMC) has been working as a worker for 9 years, his basic salary based on social insurance contributions was previously at 5.4 million VND/month. However, his actual income is paid based on products, so he receives more than 15 million VND. "In addition to product salaries, the company does not pay any other allowances or supplements. I do not know if with the new calculation method for social insurance contributions, will employees receive any additional benefits, or will the contribution rate be higher?", Mr. Thanh wondered.

According to Ho Chi Minh City Social Insurance, the 2024 Social Insurance Law adds the concept of a reference level as the basis for social insurance contributions, replacing the basic salary. The reference level is decided by the Government and adjusted based on the increase in the consumer price index, economic growth, in accordance with the capacity of the state budget and the social insurance fund. Accordingly, the salary used as the basis for social insurance contributions has a minimum level equal to the reference level and a maximum of 20 times the reference level at the time of contribution. Currently, the reference level is calculated based on the basic salary of 2.34 million VND/month, so the ceiling for social insurance contributions from July 1, 2025 will be 46.8 million VND/month, corresponding to a maximum contribution of more than 11.7 million VND per month.

According to lawyer Nguyen Huu Ngoc, it is necessary to strengthen propaganda about the long-term benefits of participating in social insurance, helping employees realize that paying social insurance is an investment for the future, protecting them in case of illness, maternity, helping to ensure security in old age. In addition, the Government can adjust the social insurance contribution ceiling in each stage, and needs to announce a roadmap to adjust the reference level clearly and transparently, in consultation with experts and representatives of employees and employers based on the economic situation and the labor market. This is to avoid putting too much pressure on employees and businesses in difficult times.

Lawyer Nguyen Huu Ngoc, Ho Chi Minh City Bar Association, said that the current basic salary is "rigid" and does not fully reflect the fluctuations of the labor market and the economy. Replacing it with a reference level allows calculating salaries based on many factors such as consumer price index, labor productivity, economic development level, in accordance with the state budget and social insurance fund of each period. Switching to a reference level can help these policies reflect more accurately the actual living standards and income of employees, ensuring that the rights of social insurance participants are improved.

Ensuring workers' rights

With major changes in the way of calculating social insurance contributions, social insurance agencies and enterprises have widely promoted the calculation of social insurance contributions based on total income instead of basic salary. Mr. Pham Van Phat, Director of Tan Dinh Social Insurance (HCMC), said that the monthly salary for compulsory social insurance contributions for employees working under contracts includes salary according to job or position, salary allowances and additional payments. Thus, all fixed monthly payments will be included in the social insurance contributions. This ensures better benefits for employees when enjoying retirement, death, illness, maternity, work accident and occupational disease benefits; helping employees have the opportunity to receive pensions more easily, health insurance and other benefits when eligible.

Chairwoman of the Trade Union of YAZAKI EDS Vietnam Co., Ltd. (Di An Ward, Ho Chi Minh City) Pham Thi Tuyet Nhung said that the company currently has more than 12,000 employees. According to the Social Insurance Law 2024, the company does not incur additional costs but only adjusts the calculation of the basis for social insurance contributions and benefits from the basic salary using the reference level prescribed by the Government. According to Ms. Nhung, with the new regulation, the total social insurance contribution rate remains unchanged, but employees have clearer benefits from the sick and maternity fund. In addition, the company is reviewing the social insurance contribution rate for employees, building a suitable salary scale, and publicly announcing the contributions and benefits to employees.

The change in the basis and rate of social insurance contributions aims to ensure the sustainability of the social security fund. More importantly, this change demonstrates the principle of fairness and transparency in the level of social insurance contributions and benefits, limiting the situation of evasion and debt. At the beginning of the implementation, many businesses and employees were still hesitant, but in the long term, this is the foundation for strengthening the social security system to be more sustainable and fair.

DONG SON - THAI PHUONG - CAM NUONG

Source: https://www.sggp.org.vn/doi-cach-tinh-luong-dong-bhxh-bao-dam-cong-bang-huong-den-an-sinh-ben-vung-post813477.html