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Friday,  Dec 15,2017,23:03 (GMT+7)

Labor ministry mulls shorter social insurance payment period

Thuy Dung
Friday,  Dec 1,2017,15:12 (GMT+7)
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Labor ministry mulls shorter social insurance payment period

Thuy Dung

HANOI – The Ministry of Labor, Invalids and Social Affairs will propose the Government reduce the mandatory period of laborers paying social insurance to lure new entrants, heard a seminar on reforming the national social insurance system in Hanoi City on November 29.

Pham Truong Giang, head of the ministry’s Social Insurance Department, said an increasingly large number of people have demanded lump sum social insurance payouts as they cannot wait long years to benefit. It is estimated 500,000 to 600,000 people demand lump sums a year, while the number of employees enrolled anew into the social insurance system is around 700,000.

Data of the Vietnam Social Insurance shows the agency had handled 600,000 claims for lump sum payouts in the year to October, a year-on-year rise of 18.5%.

It would be tough to expand the coverage of social insurance, as the number of leavers is roughly equal to that of entrants.

Giang admitted the duration of 20 years required for the insured to get pensions is too long and not appealing to workers. Therefore, the Ministry of Labor, Invalids and Social Affairs will propose the Government cut the minimum duration to 15 years, or even 10 years.

Deputy Prime Minister Vuong Dinh Hue backed this proposal, saying that it is necessary to make the policy more appealing so that workers will not opt for lump-sum social insurance payments.

The 2014 Law on Social Insurance stipulates that from 2022, male and female workers will have to pay social insurance for 15 and 20 years respectively if they want a pension equivalent to 45% of their average wages. Besides, for each additional year of paying social insurance, such employees will get a rise of two percentage points, but the maximum pension is capped at 75%.

Nguyen Nguyet Nga, senior expert in social insurance from the World Bank, said if a decrease in the minimum social insurance payment period is adjusted to receive pensions sooner, the pension formula should be changed to decrease the rate of benefits.
 

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