Decree 208/2004/ND-CP on adjusting pensions and social insurance allowances

Decree 208/2004/ND-CP, issued by the Government on 14 December 2004, adjusts monthly pensions and social insurance allowances. It took effect 15 days after publication in the Official Gazette, with benefits applied from 1 October 2004. The Decree covers cadres, civil servants, workers, public employees, the armed forces, and cipher staff drawing monthly pensions under state pay scales; people with mixed careers under both state and non-state pay; recipients of monthly working-capacity-loss allowances, including those under Decision 91/2000/QD-TTg; rubber workers on monthly allowances; and commune-level cadres on monthly allowances under Decree 09/1998/ND-CP and Decree 121/2003/ND-CP. The central adjustment relevant to pension calculation is a 10 percent increase, applied from 1 October 2004 to 30 September 2005, to the current monthly pension or allowance of those who began drawing benefits before 1 October 2004. For people who began drawing benefits between 1 October 2004 and 30 September 2005, the Decree instead applies a one-time adjustment at the point of retirement, with the rate keyed to the retirement month. The average monthly contribution salary used to compute the pension, the one-time retirement allowance, the one-time social insurance benefit, and the one-time survivor allowance is split by period: contribution time before 1 October 2004 is valued using the pay levels under Decree 25/CP and Decree 26/CP of 23 May 1993 and related 1993 resolutions, while time from 1 October 2004 onward is valued under the new pay scales set by Decree 204/2004/ND-CP and Decree 205/2004/ND-CP, Resolution 730/2004/NQ-UBTVQH11, and Decision 128/QD-TW. For people with mixed state and non-state careers, only the portion of the pension based on state pay scales is adjusted. The Decree includes a schedule of one-time adjustment percentages by retirement month for the last three months of 2004 and the first nine months of 2005, with the rate declining for later retirement dates because those workers already benefit from the new, higher pay scales. People who stopped work to wait to reach retirement age, and who only begin drawing a pension within the covered window, have their average contribution salary valued under the pre-October 2004 pay rules and receive the same adjustment as those who retired before 1 October 2004. On funding, the state budget covers adjustments for benefits dated before 1 October 1995, while the social insurance fund covers adjustments from 1 October 1995 onward, including commune-level cadres. The Ministry of Labour, Invalids and Social Affairs was tasked with guidance and with proposing further pension adjustments for the 2005 to 2008 period.