Ensuring income safety for participants at risks

Social insurance as well as its name is a form of insurance that involves social. The birth of social insurance is an indispensable and objective requirement in the development of mankind. In addition to the purposes of ensuring income safety for employees when encountering risks during the work process such as illness, maternity, occupational accidents or diseases, job loss, etc., the biggest goal the social insurance policy aims at is ensuring long-term income for employees at the end of their working age or incapable of working, as well as receving medical care and health care, ensuring the quality of life for employees when they age.

The policy of the Party and State is to continue to expand the coverage of the social insurance policy so that more and more employees have the opportunity to participate in social insurance and to enjoy the retirement benefits when they get old. Resolution 28 NQ/TW dated May 23, 2018 in the seventh plenary session of the 12th Central Committee of the Communist Party on social insurance policy reform has set the target by 2030, which is to “strive to achieve about 60% of the workforce in age of participation in social insurance; about 60% of the people after the retirement age will be entitled to a monthly pension and social insurance and social pensions", at the same time aiming at "universal social insurance".

Overview image of the Conference

However, besides the efforts of the social insurance industry, state management agencies and localities in developing social insurance participants and expanding the coverage of social insurance, a large number of employees are still choosing lump-sum social insurance allowance, which leads to challenges in ensuring the social insurance policy goals set out in the coming time and requires an objective review and assessment to carry out suitable solutions.

Receiving lump-sum social insurance allowance lowers the humanistic meaning of the social security policy

At the Conference, Dr. Bui Sy Loi, Vice Chairman of the National Assembly's Committee on Social Affairs gave an overview of the development of social insurance in Vietnam. In which, Loi emphasized: Social insurance policy clearly shows the nature and orientation of the development of a socialist-oriented market economy. Policies and laws on social insurance have been gradually improved through amendments to the law and coverage has been expanded over the years. Resolution 28-NQ/TW of the  Central Committee of the Communist Party on reform of social insurance has set the directions to continue to improve the social insurance policy, of which the most important is the view on universal social insurance. There are many challenges ahead, especially expanding coverage of social insurance in the informal group of workers or farmers. However, the status of receiving lump-sum social insurance allowance has made efforts to mobilize and expand social insurance coverage much more difficult.

Experts delivered their presentations at the Conference

According to MSc. Tran Hai Nam - Deputy Director General of Department of Social Insurance of Ministry of Labor, Invalids and Social Affairs, people who enjoy lump-sum social insurance allowance age from 20 to 39 years old, which account for 79% of the total number of lump-sum social insurance beneficiaries in the 2014-2018 period; those who are entitled to lump-sum social insurance allowance are usually those with a low number of years of social insurance payment; in the period 2014 - 2018, nearly 50% of people enjoying lump-sum social insurance allowance have only under 3 years of social insurance payment. In general, the education and technical expertise of the people enjoying lump-sum social insurance allowance are low, who mainly have not finished high school and have not received vocational training.

There are many reasons leading to the trend of increasing lump-sum social insurance allowance beneficiaries over the past time, such as: employees who lose their jobs to face immediate financial needs, such as to spend on family activities or to invest in school education for their children or debts, etc. In addition, the lump-sum social insurance allowance policy is quite open and easy to access as at present, workers will look to it as an immediate financial tool.

According to Dr. Nguyen Van Dinh - Associate Professor of NEU's Faculty of Insurance, receiving lump-sum social insurance allowance will affect the employee's income in old age, lessen the significance of the social security policy and make it impossible to continuously maintain income for employees; In the context of population aging, the above-mentioned effects bring a greater effect.

At the Conference, Mr. Vu Huu Duc, 60 years old, from Ninh Binh, one of the recipients of severance allowance under Decision No. 176/HDBT dated October 9, 1989 of the Council of Ministers (now the Government) has shared about the hardships of old life without a pension. He also expressed his wish to have a mechanism that he can return the amount of the received allowance in order to enjoy monthly pension.

Mr. Vu Huu Duc shared his story at the Conference

Another case is Mrs. Nguyen Thi Thu Huyen (living in Hai Ba Trung District, Hanoi) received lump-sum social insurance allowance in 2014, is now a freelancer and feels regretful for her hasty decision. She said that she is still young and the amount of lump-sum social insurance allowance equals to only a few years of pension. She regretted she had lost the great benefits later because of a small immediate benefit.

Both Duc and Huyen hope that all employees will consider carefully before making the decision to receive lump-sum social insurance allowance to avoid regrets.

Solutions from policy formulation and practice are needed

At the Conference, researchers shared their opinions to clarify the situation of lump-sum social insurance allowance, stated the causes and assessed the impact from different angles, which are the effects on the national social security system and the lives of the employees at the end of the working age, etc.

Mr. Le Dinh Quang, Deputy Head of Labor Relations Department of Vietnam General Confederation of Labor, said that the current employee's income is too low. The salary survey shows that the employee's income is only enough to ensure immediate lives. Accumulation only ensures about 15% and they will run out of money once leaving the job and lead to the tendency to receive lump-sum social insurance allowance. This reality leads to the fact that it is necessary to improve lives and ensure jobs for employees in a better way. On the other hand, it is necessary to strengthen inspection, examination and handling of violations of social insurance and health insurance, especially outstanding debts of social insurance and health insurance. To reform administrative procedures, conduct favorable regime settlement and make the policy more appealing.

Experts presented at the Conference

To overcome this limitation, Dr. Bui Sy Loi said that on the one hand, it is necessary to increase the support level for people to participate in social insurance; on the other hand, to continue the process of applying IT in implementing social insurance procedures, improving the service quality of the social insurance industry and creating maximum favorable conditions for people to participate as well as enjoy the benefits of social insurance policies. According to MSc Tran Hai Nam, in order to minimize the lump-sum social insurance entitlement, the State needs to create jobs and improve income and lives of workers. To increase the benefits and appealingness of the pension policy through early implementation of reducing the minimum contribution period requirement from 20 years to 15 years and eventually 10 years. To complete the policy of voluntary social insurance in the direction of diversification and flexibility (adding short-term regimes, strengthening policies to support contributions from the state budget and mobilizing other social resources, etc.), thereby, contributing to creating more opportunities for employees to continue participating in voluntary social insurance contributions to be eligible for pensions.

Appreciating the meaning of organizing a Conference on lump-sum social insurance allowance, Loi said that from the analysis and evaluation, we have owned a comprehensive perspective on the current state of receiving social insurance. At this point, it is necessary to evaluate the implementation of the Law on Social Insurance in more detail, especially on the process of implementing the lump-sum social insurance regulations as well as the shortcomings, and soon have a roadmap to amend the law meeting current practical requirements. In terms of implementation, it is necessary to expand the information and communication network to change employees' awareness of the meaning of the policy of social insurance, limiting lump-sum social insurance allowance, so that they shall proactively participate in social insurance to enjoy pension. To continue administrative reform and change management methods to create satisfaction and improve people's confidence with the State's welfare policy.

Experts presented at the Conference

On the basis of the policy analysis comments at the Conference, VSS Deputy General Director - Mr. Le Hung Son requested the state management and policy-making agency to soon study, amend policies and laws, and overcome existing shortcomings, thereby facilitating the implementation process. Sincerely grateful for the enthusiastic and responsible comments from many sides, Son commited to continuing to strengthen administrative procedure reform, improve public service ethics and create the most favorable conditions for people to participate and enjoy social insurance policies. By believing in policies and agencies, people will actively participate in more sustainable social insurance. (Edited)Restore original