Lately, the Ministry of Human Resources and Social Security ("MOHRSS") and the Ministry of Finance ("MOF") have jointly issued the Circular on Adjusting the Basic Pension of Retirees in 2019 (the "Circular").
The Circular clearly states that from January 1, 2019, the basic pension will be increased for retirees of enterprises, government agencies and public institutions who have completed the retirement procedures by the end of 2018 and receive the basic pension monthly, generally by approximate five percent of the average monthly basic pension received by the retired in 2018. According to the Circular, the adjustment will be made, as before, in three different forms which are the fixed-amount adjustment, the adjustment linked to how many and for how long the basic pension insurance contributions have been made, and the preferential adjustment. Specifically, the fixed-amount adjustment means that the various types of retirees in the same region will enjoy a pension increase of largely the same amount, which is a measure to show social fairness. The adjustment linked to the basic pension insurance contributions, an incentive mechanism dependent on the gross amount and the length of years the contributions have been made, enables individuals who have made the contributions in a larger amount and for a longer period of time before their retirement to obtain a higher amount of pension. And the preferential adjustment, as an approach to show care for key groups, is mainly aimed at offering slightly more benefits to such groups as individuals who retire at an older age and retirees in tough and remote areas.