Reforming the social insurance policy progressively, approaching social security standards in Conventions and Recommendations of the International Labor Organization 

Reform of social insurance policy towards universal coverage is comprehensively recognized from inputs to outputs. That is the completion of the rate of social insurance participation in comparison to the people in the working age group (35% to 2021; 45% to 2025; 60% to 2030); and the number of people after the age of pension entitlement to enjoy pensions, with the proposed rate of 45% by 2021; 55% by 2025 and 60% by 2030.

Social insurance policy reform not only pays attention to workers in the formal sector, but also on farmers, workers in the informal sector - this is a gap that was not yet fully addressed in policy making before. By 2025, out of 45% of the labor force in the age of participating in social insurance, the farmers and informal employees participating in voluntary social insurance account for about 2.5% of the workforce.

Within 10 years implementing the voluntary social insurance policy, from 2008 to 2018, the total number of new voluntary social insurance participants reached about 280,000 people. In 2019, the process of developing participants of voluntary social insurance recorded an impressive breakthrough, with a new increase of nearly 300,000 people. The total number of people participating in voluntary social insurance has so far reached 580,000 people. That means, in just one year of implementation, the number of people who participate in voluntary social insurance is 1.07 times compared to that of the whole 10-year period.

Following the direction of Vietnam Social Security, 100% of the social insurance agencies of provinces and cities actively and promptly advised the Party committees and authorities to promulgate documents directing the implementation of Resolution No. 28 -NQ/TW in the locality. It is noteworthy that along with the propaganda of Resolution No. 28 NQ/TW of the Party Central Committee, the local social insurance authorities also promptly advised and propagated the implementation of Resolution No. 125/NQ-CP, Resolution No. 102/NQ- CP of the Government on assigning development targets for participants of voluntary social insurance to localities, and proposing to People's Councils at all levels to put the targets on the development of beneficiaries of social insurance and health insurance into economic development targets.

After nearly 6 years of implementing the Resolution 28, under the direction and guidance of the Central Propaganda Committee, the propaganda for the implementation of Resolution No. 28-NQ/TW on the Party's social insurance policy reform has been seriously implemented in a synchronous and unified method nationwide. The change in awareness, ideological views with a very high political determination in the whole political system was raised one step. This is an opportunity and orientation for the ministries, branches and the Vietnam Social Security as well as related organizations and individuals to complete and organize the implementation of policies and laws on social insurance, ensuring that all people can enjoy the social security policy of the Party and State.

Social security can be an important enhancer for the broader modernization efforts that the country is embracing
ILO’s senior specialist Nuno Cunha: The ILO trusts the capacity of Viet Nam to reach its goals, however it is also important to be aware of existing challenges.
The growing attention that social protection has been gaining in the global and regional agenda is undeniable. The UN Sustainable Development Goals, endorsed by Viet Nam, confirmed the new momentum, with the extension of social protection figuring prominently. In a world where no one is expected to be left behind, certainly no one can be left without social protection, widely recognized as indispensable in reducing and preventing poverty and vulnerability.

The impact of the reforms delineated under the master plan on social insurance reform goes well beyond the welfare of its beneficiaries. History in most advanced economies shows that social security has positive direct and indirect productivity effects. For many decades, it has reduced social contradictions, enhanced national identity, compensated for market failures, contributed to stabilizing, and often even stimulated economic growth.

In a moment when Viet Nam is going through an important social and economic transition, social security can be an important enhancer for the broader modernization efforts that the country is embracing. China for instance has used a combination of expanded social security and increased wage levels to boost domestic demand and enable economic transformation. The existence of a well-established social security system was widely recognized as essential to help China navigate the impact of the recent global economic crisis.
Back to Viet Nam’s master plan, an extremely welcomed decision by the ILO is the country’s establishment of the goal of universal coverage. Through this resolution, Viet Nam aligns itself with the key international normative references such as the ILO Recommendation on Social Protection Floors (R202) and the previously mentioned UN 2030 Sustainable Development Agenda. The decision to reach universal coverage through the use of a multi-tier system, combining non-contributory (tax funded) with contributory benefits (social insurance) sets Viet Nam in the path of other countries in the region that already reached universal coverage such as Japan, Republic of Korea, China or Thailand.

This gains even more importance considering that Viet Nam is one of the fastest ageing societies in the world. Rising longevity and declining fertility have combined to swell the number of elderly needing care and reduce the number of workers supporting them. While in 2015 there were around six working age adults for one older person above 60 years, in 2055 it will only be two working age adults for every elderly. This means that tomorrow’s so-called “sandwich generation” (working age population which are “sandwiched” between caring both for their children and for their parents) will face a heavy burden of caring for three generations – their children, themselves and their parents. In the absence of pensions, the onus will be even heavier. This burden is aggravated as there will be fewer working age adults and thus fewer siblings with whom to share the increasingly heavy burden of caring for ageing parents. Ensuring universal protection in old-age is hence not only beneficial for older persons, but also for families.
On a different dimension, the proposed incremental reforms regarding the gradual increase in retirement age; equalization between men and women; approximation of the replacement rates to the international general levels will all contribute to ensure the long term financial balance of the system. Some of these reforms are not easy and not always enjoy public opinion support. However these are essential to guarantee that the system will be able in the future to respect the rights being acquired today. It is also important to note that the resolution introduced a measure to make the pension system more attractive by setting a specific target to lower the qualifying conditions from the current 20 years to 10 years, meaning that someone who reaches retirement age limit will receive a contributory pension even if they only contributed for 10 years.

Another equally important element of the reform is the limitation of access to lump sums. Internatviding decent protection and families will need to be called in the future to bear the costs with the elderly.