Study on Using VNeID for Payments of Pension and Unemployment Benefits

20/07/2023 03:40 PM

This is one of the points mentioned in the Notice No. 238/TB-VPCP dated June 22, 2023 of the Government Office on resolving difficulties and obstacles in the implementation process of Project 06 on developing data applications on population, electronic identification, and authentication.

Study on Using VNeID for Payments of Pension and Unemployment Benefits (Illustration image - internet source)

Accordingly, to effectively implement Project 06 in the last few months of 2023, the government has directed some notable tasks, including:

The State Bank of Vietnam will lead and coordinate with relevant agencies to study and integrate customer account information through the chip-embedded Citizen Identity Card, using VNeID to serve the payment of pensions, social security benefits, unemployment benefits, natural disasters, epidemics, etc., without using cash.

The Ministry of Public Security will lead and coordinate with relevant ministries, sectors, and localities in integrating, verifying, and displaying personal information and documents on the VNelD application, gradually replacing the provision of personal documents in carrying out administrative transactions and procedures.

VNeID mức độ 2: Phục vụ giải quyết thủ tục hành chính và các giao dịch

Illustrative image (internet)

It is crucial to improve the VNelD application, diversify utilities and communications to facilitate people's participation in using the application; Review and evaluate the implementation of the inter-agency e-service software; address existing issues, ensuring smooth connectivity; update and synchronize the status of files with the local administrative procedure information system.

The Ministry of Finance will develop a plan, lead and coordinate with the Ministry of Public Security to focus on implementing solutions for synchronizing tax data, using the chip-embedded Citizen Identity Card and electronic identification as the tax code and identity in electronic transactions to improve tax collection efficiency; striving for 100% of businesses to connect their electronic invoices generated from their cash registers to the tax agency's data system, focusing on critical areas such as food and beverage operations, restaurants, hotels, entertainment services, supermarkets, etc.

In the world, most OECD countries aim to protect at least the initial periods of absence from the labour market due to unemployment. On average five years of unemployment will result in a pension of 94% of that of a full-career worker for the average-wage case. With 10 years of unemployment after a five-year delay to beginning the career this falls to 78%, with both scenarios leading to a higher retirement age in a few countries. For low earners, the impact of these two career breaks on their pension benefits is lower, with a relative pension of 96% and 83%, respectively, compared with the full-career case.

For the average-wage worker, pension shortfalls relative to someone with a full, unbroken career varies widely across countries. They are generally larger for longer duration of career absence and for high-earners. In the Slovak Republic the pension loss after a five-year unemployment break is around 12% as there is no instrument to cushion the impact of the unemployment shock on pension. In Latvia there is only minimal protection for the first year. In Australia and Iceland, although there is no protection in the DC pension schemes, both countries have basic pensions that are gradually withdrawn against other income, so whilst this does not provide protection for the five-year case it does cushion the impact of the longer unemployment break scenario.

However, in other countries, pension rules can offset the fallout from spells of unemployment. This applies for example in Ireland, Spain and the United States. In Spain and the United States, this is because total accrual rates and the reference wage used to compute benefits are not affected – for example, pension entitlements stop accruing in Spain and the United States after 38.5 and 35 years, respectively. In Ireland, this is because such a break does not affect the basic pension level. In New Zealand as well periods of unemployment do not affect the basic pension as it is entirely residence based. The Netherlands’ residence-based basic pension affords some protection against unemployment, while the occupational pension is sharply reduced by unemployment breaks.

In Greece, Luxembourg and Portugal the benefit upon retirement will be high but the individual needs to work one, three or one year longer, respectively, to get a full pension (i.e. without penalty). For Greece and Portugal this is also because the indexation of benefits in payment to the full-career worker is below wage growth. In Luxembourg contributions at later ages result in a slightly higher accrual with a long career. Average-wage workers have to retire later to benefit from a full pension after experiencing a five-year unemployment break in France and Slovenia as well due the required contribution rules.

VNeID là gì? Hướng dẫn cách tải và cài đặt ứng dụng VNeID

Illustrative image (internet)

There are countries which afford low-paid workers better protection against long-term unemployment than average earners, because minimum pensions and resource-tested schemes play a crucial role in some of them – Australia, Belgium, Canada, Chile, Colombia, Iceland, Mexico, Norway and Poland. Where there is no or limited pension credit provision – in Chile, Estonia, Israel, Korea, Mexico and Turkey, for example – pension losses are more substantial for average-wage earners with effects felt most keenly in countries whose compulsory pension programmes link pensions and earnings closely – e.g. Chile – and at higher earnings levels. By contrast, lower earners in Germany are more affected by the longer unemployment break than average earners, as low earners lose their entitlement to the supplemental component of the pension, due to their shorter contribution period.

In Colombia and Mexico low earners even with long-career breaks meet the criteria to receive the minimum pension, as is the case for full-career low earners, and thus their pension entitlement is not affected by the career break.