Minister of Home Affairs Phạm Thị Thanh Trà reports on the progress of restructuring the government apparatus at the government meeting on Sunday. — VNA/VNS Photo

HÀ NỘI — The Ministry of Home Affairs has proposed a budget of VNĐ130 trillion (US$5.1 billion) to support early retirement and workforce reorganisation in Việt Nam’s public sector.

The draft decree, submitted to the government by Minister Phạm Thị Thanh Trà, outlines comprehensive policies to ensure fair compensation for civil servants, public employees and contracted workers affected by organisational restructuring.

A key feature is the one-time allowance for employees retiring ahead of schedule due to the restructuring. The benefits are categorised based on the timing of retirement:

Employees retiring within 12 months of the restructuring decision, but with less than five years until retirement, will receive an allowance equivalent to one month’s salary for each month of early retirement.

Those with five to ten years until retirement will be entitled to an allowance equal to 0.9 months’ salary, per month of early retirement, capped at a maximum of 60 months.

Meanwhile, employees retiring after 12 months of the restructuring decision will receive half of the aforementioned allowances.

The decree also outlines detailed benefits for employees retiring early under five distinct scenarios:

Employees with between two to five years until retirement will not face reductions in their pension rates. They will receive an additional five months’ salary for every year of early retirement, five months’ salary for their first 20 years of service and 0.5 months’ salary for each additional year of service beyond the 20 years.

Employees with between five and 10 years until retirement will similarly avoid pension reductions. They are entitled to an additional four months’ salary for each year of early retirement, along with the benefits for their years of service.

Those working in hazardous or challenging conditions for at least 15 years, or in economically disadvantaged regions, will receive enhanced benefits without reductions in their pensions.

Employees with less than two years to retirement will be entitled to full pension benefits without reductions.

The decree also promises generous compensation for those opting for voluntary redundancy.

Those who choose to resign will receive a severance allowance of 0.8 months’ salary per month of eligible service if the resignation occurs within 12 months of restructuring, 1.5 months’ salary for every year of service contributing to social insurance, and an additional three months’ salary to support job-seeking efforts.

For employees resigning 13 months or later after the restructuring, the severance allowance will be calculated at 0.4 months’ salary per month of eligible service.

Meanwhile, senior officials whose terms are extended by the Politburo or Secretariat beyond the standard retirement age, will be entitled to a one-time allowance equal to 30 months’ salary upon eventual retirement, alongside standard social insurance benefits.

The Ministry estimates that VNĐ130 trillion will be required to fund these policies. This budget will include VNĐ111 trillion for civil servants and public employees, VNĐ9 trillion for commune-level personnel, VĐN4 trillion for contracted workers and VNĐ2 trillion for training and retraining initiatives.

Despite the high initial cost, the policies are expected to save the government approximately VNĐ113 trillion ($4.4 billion) over five years through reduced administrative and payroll expenses. The savings will primarily stem from decreased obligations related to social insurance, health insurance and other recurring costs.

"The restructuring will significantly lower recurring expenditures, including reducing state budget contributions for social insurance, health insurance and union fees for departing employees by 22 per cent and cutting 10 per cent of the bonus fund,” the Ministry of Home Affairs stated.

The government’s efforts to realign its workforce structure reflect its broader strategy of fostering a leaner and more effective administration while maintaining social stability and fiscal prudence. — VNS