Decree 117/2005/ND-CP on adjusting pensions and social insurance allowances

Decree 117/2005/ND-CP, issued by the Government on 15 September 2005, adjusts monthly pensions and social-insurance benefits. It is the parent instrument that Circular 26/2005/TT-BLDTBXH later guides, and it is relevant to pension calculations because it sets the indexation factors applied from 1 October 2005. The covered recipients include civil servants, officials, and workers, military, police, and cipher personnel on state-scale pensions; people on combined state-scale and non-state-scale wage histories; recipients of monthly loss-of-working-capacity allowances; rubber workers on monthly allowances; and commune-level cadres on pensions or allowances under earlier decrees. For those already drawing a pension or benefit before 1 October 2005, the decree sets percentage increases on the amount in payment. For retired civil servants, officials, and workers: a 10 percent increase for those whose pre-retirement pay was under 390 dong per month under Decree 235/HDBT, whose old coefficient was below 3.06, or whose new coefficient was below 3.99 under the 2004 wage rules; and an 8 percent increase for those at or above those thresholds. For military, police, and cipher personnel the thresholds are 425 dong, old coefficient 4.4, and new coefficient 5.6, with the same 10 percent and 8 percent steps. A flat 10 percent increase applies to those on loss-of-working-capacity allowances, recipients under Decision 91/2000/QD-TTg, rubber workers, and commune cadres. For people retiring between 1 October 2005 and 30 September 2006, the decree fixes how the average monthly contribution salary that determines the pension is computed. Contribution time before 1 October 2004 is valued using the wage levels under the 1993 framework (Decrees 25/CP and 26/CP and related resolutions); contribution time from 1 October 2004 onward is valued under the 2004 wage rules. The pension is then adjusted once, in the month of retirement, by a rate that depends on that month: 14 percent for October 2005, then 13.5, 13, 12.5, 12, 11.5, 11, 10.5, 10, 9.5, 9.0, and 8.5 percent down to September 2006. For those whose pension is partly based on a state-scale wage and partly on a non-state-scale wage, only the state-scale portion is adjusted. Special transitional rules address people who stopped work to wait until reaching pension age, aligning their average contribution salary and adjustment factor with the date they qualify. These contribution-base and indexation rules feed pension-base and replacement-rate calculations for the 2005 to 2006 retirement cohort. The decree was proposed by the Minister of Labour, Invalids and Social Affairs.