In the latest draft Government Report, the Ministry of Labour, Invalids and Social Affairs clearly identifies the shortcomings in the current security system. For example, the social insurance system is basically single-tiered design, lacking the connection between social insurance policies and other social policies.

Therefore, the Ministry of Labor, War Invalids and Social Affairs proposes to amend the law in the direction of designing a multi-tiered security system - which means that the elderly not only receive pensions from social insurance, but also receive benefits from other state welfare policies. For example, the policy of monthly social allowance for 80-year-old people as in the country is being implemented. In addition, adding subjects participating in compulsory social insurance for owners of individual business households, business managers and and operators of cooperatives without salary, part-time employees, etc.

Along with that, the draft law will adjust the regulations on enjoying lump-sum social insurance allowance in the direction of creating conditions for employees to have options. Specifically: If an employee who has not yet reached retirement age, but after one year does not participate in social insurance and requests to enjoy lump-sum social insurance allowance, the benefit rate for each year of payment of social insurance is equal to one time of the average monthly salary for which social insurance has been paid. “In case the employee reaches retirement age but is not eligible for monthly pension or the employee suffers from a serious illness, or goes abroad to settle lawfully, the rate of enjoyment for each year of payment of social insurance contributions is equal to twice the average salary paid to social insurance.” - Ministry of Labour, Invalids and Social Affairs proposed.

Illustrative image (source: Internet)

At the same time, the Ministry of Labor, War Invalids and Social Affairs also wants to increase the appealingnes of voluntary social insurance by supplementing maternity benefits and increasing the support level for participants. Specifically: Female employees participating in voluntary social insurance when giving birth are entitled to an allowance of 2 million VND for a new born child. It is proposed that the State increase the support level from 10% to 30% of the voluntary social insurance premium based on monthly income equal to the poverty line in rural areas. It is proposed to adjust the conditions for enjoying the pension regime in the direction of gradually reducing the minimum number of years of payment of social insurance premiums to enjoy the pension scheme from 20 years to 15 years, with the aim of creating favorable conditions for elderly employees with low social insurance participation years to access and enjoy social insurance benefits.

Notably, in this draft of the Ministry of Labour, Invalids and Social Affairs, there is a proposal to supplement regulations to assign the Government to study and pilot the child allowance regime. Accordingly, participants of compulsory social insurance who have children under 6 years old are entitled to a monthly allowance calculated on each child until the child is full 6 years old. “This solution is to increase the attractiveness of the policy and increase short-term benefits, in the immediate future, to retain employees, especially those of child-rearing age, to stay in the system, and to limit lump-sum social insurance allowance.”- The Ministry of Labour, Invalids and Social Affairs explained.

According to calculations by the International Labor Organization (ILO), if it is stipulated that each child under 15 years old who is the child of a social insurance participant is entitled to a subsidy of 350,000 VND/month in 2018, then annually adjusted for inflation until the benefit is 560,000 VND/month in 2030, the contribution rate for this regime should be set at 3% in the period 2018-2030. In case the age of children entitled to benefits is specified from 0 to under 6 years old, the required contribution rate is 1%.