Many doors closed after receiving lump-sum social insurance benefits

From the beginning of this year, in the central province of Thua Thien - Hue, more than 2,400 employees have claimed lum-sump social insurance benefits, an increase of 35% compared to that of the same period last year. In March 2021, the number of insurers having claimed lump-sum social insurance benefits increased 70% compared to February 2021, most of them are from 35 to 40 years old and work in industries of garment and textile, footwear, tourism, restaurants and hospitality.

Nguyen Thi Kim living in Phuoc Vinh Ward in Hue City said that before getting lump-sum social insurance benefits of VND25 million, she used to work for a plastic production firm.

Illustrative image (source: internet)

With that sum, Kim immediately bought her son a used motorbike, repaired her house’s fence and bought some stuff for her family, she said.

She quickly ran out of money which was meant for her retirement in future

“If only I thought carefully before deciding to get one-time social insurance,” she regretted.

Duong Van Dien of Hue City said that in 2001, as his workshop was dissolved, he stopped working at the age of 35 with 14 years participating in social insurance. At that time, he thought that after claiming lump-sum social insurance benefits, he would find another job and re-participate in social insurance until he would have enough 25 years of participating in social insurance. So, he could get the highest retirement pension rate which is 75 per cent of his monthly salary.

So, he decided to get lump-sum social insurance benefits. He spent part of the sum to pay the debt that he owed to build a house before. Then, he applied to work for a mechanic company and joined social insurance as planned.

However, when he re-participated social insurance for nine years, he got a work accident that seriously injured his hands and he lost his whole working ability.

At present, he is struggling to earn his living with a small grocery store run by his wife.

“Some of my co-workers did not claim for one-time social insurance and now, they enjoy retirement pension. Their lives are much better than mine,” he said.

I asked insurance agencies whether I could get a retirement pension if I returned the lump-sum social insurance benefits so that my social insurance participation was not disrupted. However, Law on Social Insurance did not allow it, Dien sadly said. 

Regarding the fact that many labourers lost stable finance for their retirement due to receiving a one-time social insurance allowance, former vice chairman of The Vietnam General Confederation of Labour Mai Duc Chinh warned that there would be serious long-term consequences if allowing labourers to withdraw lump-sum social insurance benefits without throughout considerations.

As soon as receiving money, they tended to spend on short-term needs. As a result, they would have no money to afford when getting the illness in future, he said.

“The more employees claim one-time social insurance benefits, the more burdens Government would have to suffer in future as State’s budget and social insurance fund would have to pay more social allowance for such disadvantaged people,” he said.

Chính suggested that requirements for employees to get one-time social insurance benefits should be changed. For examples, the unemployment period before a one-time social insurance benefits claim should be extended or only employees who are really in need of money at the time they claim for one-time social insurance benefits would be eligible to get it.

Retirement pension for all

  Former deputy minister of Labour, Invalid and Social Affairs said that since 2006, the ministry saw shortcomings of social insurance policies relating to retirement.

The ministry proposed to amend the law to limit the withdrawal of lump-sum social insurance benefits, he said.

However, due to unclear explanations, Article 60 of the Law on Social Insurance 2014 was inactivated due to unclear explanations that resulted in improper public understanding and objection.

“I hope that amendments to the law in coming time would include solutions and breakthroughs to further implement reforms in social insurance policies so that social insurance would become the main pillar in Việt Nam’s social security system, helping increase the coverage of social insurance towards a universal social insurance,” Huan said.

Under the labour ministry’s proposal to the law on social insurance, the minimum number of years participating social insurance for people to get retirement pension would be reduced to 15 years and then 10 years instead of 20 years as currently so that old people or those with few years participating social insurance have opportunity to access and enjoy social insurance benefits.

Regarding the proposal, Mr Mai Duc Chinh said that only one-third of Vietnam’s labour force participated in social insurance while the remaining amount is working in the informal sector and have yet to join social insurance.

“Those without social insurance will not have a retirement pension, which creates burdens for the country’s social security,” he said.

“It’s necessary to convince labourers not claim one-time social insurance benefits, to keep participating social insurance so that they could get a pension when they retire,” he said.

It was necessary to help labourers understand that social insurance benefits were not only the monthly pension they receive but also free health insurance with a high rate of medical examination and treatment costs to be paid by the social insurance fund.

“It’s reasonable to reduce the number of years participating in social insurance as it creates a motivation for labourers to continue their social insurance participation,” he said.

“Current regulation with the number of years participating social insurance being at least 20 years discouraged labourers as many of them think that they would not have enough 20 years, so they tend to withdraw one-time social insurance benefits, particularly when they change their jobs,” Chinh said.

Lawyer Dang Anh Duc from Hanoi Bar Association said that in long term, Law on Social Insurance should have stricter requirements for claiming one-time social insurance benefits.

He also agreed to the proposal on reducing the number of years participating in social insurance so labourers could get retirement pension more easily.