(Source: Viet Nam Social Security)

In November 2017, the Social Security Magazine published an article "Joining social insurance and saving math for the future" by Do Ngoc Tho, Deputy Director of the Vietnam Social Security's Department of Social Security Policy. The article presented a comparison between receiving pension and lump-sum social insurance reception, giving the employees information before making their decisions regarding social welfare benefits when they reach retirement age. 

As per the Social Insurance Law 2014 and Resolution No.93/2015/QH by the National Assembly on lump-sum social insurance benefits, if employees stop paying social insurance premiums, they can start again when they can afford it so they are still eligible for pensions.

If compulsory social insurance participants are unemployed for one year or if voluntary social insurance participants fail to pay premiums after one year and for less than 20 years, they can receive lump-sum social insurance benefits. 

The lump-sum compulsory and voluntary social insurance benefits are calculated based on the number of years during which the participants pay social insurance premiums. Each year is calculated equal to 1.5-month social insurance contribution before 2014 and 2-month social insurance payment from 2014 and later. 

Therefore, employees will have two choices: maintaining the duration of social insurance payment in line with Article 61 of the Social Insurance Law 2014 till finding jobs or receiving lump-sum social insurance benefits. 

Employees need to take caution upon considering whether to receive lump-sum social insurance benefits. Once they receive lump-sum social insurance benefits, they will have fewer chances to enjoy pension. It is necessary to understand that their social insurance contributions are managed and grown over time, and employees could maintain the duration of social insurance payment till they could afford with part of the State subsidiariesm (equivalent to 10, 15 or 30 percent of contributions for poor households in rural areas). During the retention time, if social insurance participants pass away, their families could receive funeral grant equaling to 10-month basic salary while their relatives (maximum 4 people) will receive subsidies (their children will benefit till they grow up) while their spouses and parents without income will enjoy benefits till their death. 

With 22 percent of salary paid to the pension and survivor fund, social insurance participants must pay their 2.64-month salary each year while lump-sum social insurance benefits only equal to two-month salary for each year of contribution, making them lose 0.64-month salary. Vietnam's social insurance policy and law aim to ensure sustainable livelihood of employees in the long term and do not encourage employees to receive lump-sum social insurance benefits. 

Apart from providing pensions, the Vietnam Social Security also pays health insurance premiums worth 4.5 percent of pensions for pensioners. Moreover, the State will revise pension amounts based on inflation. Since 2003, the State has revised up salary 15 times, with 7.5-9.3 fold increases.

International Cooperation Department