Established as a state agency, VSS is responsible for implementing policies that contribute to the country’s socio-economic stability and development. Over the years, VSS has continuously evolved to meet the growing and changing needs of Vietnam’s population, strengthening the nation’s social security framework. This article explores the foundation, development, and impact of VSS in fostering social security in Vietnam.

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Foundation of Vietnam Social Security (VSS)

The foundation of Vietnam Social Security dates back to the early 1990s when the government recognized the need for a structured social insurance system to support the workforce. The official establishment of VSS occurred in 1995 under Decision No. 20/CP issued by the Government. This decision marked a significant step in consolidating social insurance policies and administration under a unified agency.

Before the formation of VSS, Vietnam had a fragmented system where social insurance was managed separately by different ministries and agencies. The integration of these functions under VSS provided a streamlined approach to managing social insurance, ensuring efficiency and wider coverage.

Development of Vietnam Social Security

Expansion of Coverage

Since its establishment, VSS has made significant strides in expanding coverage to a larger segment of the population. Initially, social insurance primarily targeted formal sector employees working in state-owned enterprises. However, with Vietnam's transition to a market economy, VSS expanded its reach to include workers in private enterprises, cooperatives, and even self-employed individuals.

Health insurance coverage has also grown remarkably. In the early years, only a small percentage of the population was covered, but Government's policies and VSS initiatives have increased health insurance participation. This achievement aligns with Vietnam’s commitment to achieving universal health coverage.

Digital Transformation and Modernization

In recent years, VSS has embraced digital transformation to improve service. The implementation of electronic social insurance books, online premiums payment systems, and digital claims processing has enhanced efficiency and transparency. The National Database on Insurance, which connects different government agencies, has also streamlined data management and reduced fraudulent claims.

Furthermore, the introduction of VssID, a mobile application for social, health and unemployment insurance participants, has provided users with easy access to their insurance records, contribution history, and medical examination and treatment information. These advancements reflect VSS’s commitment to modernizing Vietnam’s social security system.

VSS has continuously reformed its policies to adapt to demographic changes and economic shifts. Key reforms include:

• Raising Retirement Age: In response to Vietnam’s aging population, the government gradually increased the retirement age under the revised Labor Code (2021).
• Flexible Contribution Schemes: To encourage voluntary participation, VSS introduced flexible contribution schemes for informal sector workers.
• Enhanced Benefits: Social insurance benefits, including maternity leave, sickness, and pension schemes, have been periodically adjusted to align with inflation and economic conditions.

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Impact of VSS on national social welfare

Improving Social Welfare

VSS has played a fundamental role in reducing poverty and promoting social equity. Pension schemes ensure that retired workers receive stable income, while health insurance programs have made medical services more accessible and affordable for low-income populations.

During the COVID-19 pandemic, VSS actively provided financial assistance to unemployed workers and businesses struggling to sustain their operations. This support was crucial in maintaining economic stability and protecting vulnerable groups from financial distress.

Contribution to Economic Development

A strong social security system contributes to economic growth by providing financial protection to workers and retirees, reducing the burden on families, and enhancing workforce productivity. Employers also benefit from a well-functioning social security system, as it fosters labor market stability and reduces employee turnover.

Additionally, VSS’ role in administering unemployment insurance helps workers transition between jobs smoothly, minimizing disruptions in the labor market.

Challenges and Future Directions

Despite its achievements, VSS faces several challenges, including:

Sustainability of the Pension Fund: The growing number of retirees relative to active contributors poses financial sustainability risks for the pension system.

Expanding Coverage to Informal Workers: While progress has been made, many informal workers remain outside the social insurance system.

Compliance and Fraud Prevention: Ensuring compliance from employers and preventing fraudulent claims require continuous regulatory improvements and technological advancements.

To address these challenges, VSS is exploring strategies such as:

Enhancing public awareness campaigns to encourage voluntary participation in social insurance.

Strengthening law enforcement to prevent non-compliance and fraudulent activities.

Leveraging big data analytics and artificial intelligence to optimize resource management.

VSS has come a long way since its inception, playing a pivotal role in ensuring social welfare and economic stability. Through continuous reforms, digital transformation, and strategic policies, VSS has expanded coverage and improved the quality of social security services. However, challenges remain, and addressing them will be critical in shaping the future of VSS' landscape.

As Vietnam progresses toward becoming a high-income country, it is essential for VSS to maintain social equity, reduce economic disparities, and ensure that all citizens have access to essential social protections. With sustained government commitment and innovative policy solutions, VSS is well-positioned to continue its mission of securing the well-being of Vietnam’s workforce and broader population.