Draft amended Law on Social Insurance

06/06/2023 01:50 PM

On May 30th, Deputy Director General Le Hung Son held a working session with a group of experts from the International Labor Organization (ILO), led by Mr. André Gama, the ILO's Director of Social Security in Vietnam. The purpose of the meeting was to consult on the amendment and supplementation of the Social Insurance Law. The meeting was attended by leaders of several units under the Vietnam Social Security.

Speaking at the meeting, Deputy Director General Le Hung Son stated that after 7 years of implementation, the 2014 Social Insurance Law has achieved many results, but also revealed some limitations, such as: Inadequate coverage compared to the potential; the number of new participants in social insurance reaching just over 38% of the workforc; the goal of increasing the coverage to 60% by 2030 poses a significant challenge. Additionally, the increasing number of workers receiving a one-time social insurance payment significantly affects the sustainable coverage of social insurance as well as their rightful benefits in old age.

"From the above situation, Vietnam Social Security has high expectations that the amendment and supplementation of the Social Insurance Law this time will institutionalize the policy reforms outlined in Resolution No. 28/NQ-TW of the Central Party Committee, aiming to build a multi-tier social insurance system, expand coverage, and ensure that everyone who reaches retirement age receives a monthly pension or social retirement allowance..." Deputy Director General Le Hung Son emphasized.

Commenting on the implementation of the goals set out in Resolution No. 28/NQ-TW, Mr. André Gama expressed the view that Vietnam needs to continue prioritizing the development of a truly multi-tier social insurance system, with enhanced supplementation and integration between contributory pillars (from workers' social insurance contributions and employers' contributions) and non-contributory pillars (covered by the state budget). "Only such efforts will enable Vietnam to provide social security to large population groups who are currently not benefiting from any social security programs, especially informal workers," stressed by Mr. André Gama.

Mr. André Gama, the ILO's Director of Social Security in Vietnam (at the center)

Mr. André Gama highlighted some existing challenges in the implementation of social insurance policies in our country. He pointed out that there is currently a lack of coordination between social insurance policies and social assistance in Vietnam, leading to many individuals falling into a "coverage gap" and not being eligible for any policies. This lack of connectivity is a barrier preventing the comprehensive development of a truly multi-tier social security system in Vietnam. Furthermore, the mandatory participation of workers in social insurance has not been expanded according to its full potential, leaving out many other cases. The short-term subsidy regime of the policy is not persuasive enough to attract participants.

Moreover, with the option for workers to withdraw their entire contributions through a one-time social insurance payment at any time, Vietnam is almost the only country in the world implementing such a policy. This leads to workers leaving the social insurance system early, and their subsequent participation time is not sufficient to receive a pension. Meanwhile, the government's investment in social security, including support for social insurance contributions for low-income individuals, is lower than the global average...

According to Mr. André Gama, to successfully expand social insurance coverage, numerous factors are required. It will not only demand social dialogue and strong determination but also a significant increase in government investment in social security. "Many low-income workers do not have the conditions to participate in social insurance and need state support. This helps to increase the number of people participating in social insurance, thereby increasing the coverage level of the system," noted Mr. André Gama.

The ILO expert group shared four main recommendations regarding the amendment of the Social Insurance Law

At the working session, the ILO expert group shared four main recommendations regarding the amendment of the Social Insurance Law. These recommendations include: Coverage expansion, adjustment of one-time withdrawal of social insurance, child allowance regime, and the establishment of a multi-tiered retirement system. Accordingly, it is necessary to immediately expand the legal coverage of mandatory social insurance, with a priority given to increasing the legal coverage for groups of workers who are capable of participating.

To achieve this, a step-by-step process is needed to allow the social insurance authorities, employers, and workers to adjust to any changes. Additionally, there should be financial support mechanisms to contribute to the system and benefit from related regimes. Regarding the restriction on one-time withdrawal of social insurance, there is a need to improve short-term regimes (for example, providing support to households based on the number of children). Expanding coverage and strengthening subsidy policies and proactive employment policies within the unemployment insurance regime. Gradually reduce the percentage of the total social insurance contributions that workers can withdraw at once, as well as an increase in the waiting period for one-time withdrawal of social insurance.

To build a multi-tiered retirement system, it is necessary to integrate social retirement into the social insurance system. Specifically, social retirement benefits should be incorporated into the social insurance system while still being financed from the budget. This process can be supported by assigning responsibility for policy planning to a specific agency. However, factors such as appropriate pension levels, minimum pension amounts, and the difference and incentives between contributory pensions and state-funded pensions need to be carefully considered…/.