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Wednesday, July 24, 2024

Shorter insurance payment period proposed for pension entitlement

By Thai Huy

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HCMC – The Ministry of Labor, Invalids and Social Affairs has proposed reducing the periods of social insurance (SI) premiums payment from 20 to 15 years to enjoy a pension and not limiting lump-sum social insurance withdrawals.

According to the Vietnam News Agency, the ministry gave two options as in the draft of the revised Law on Social Insurance.

First, the current regulations would remain, which means employees who have paid SI premiums for the full 20 years and do not continue paying voluntary SI premiums after one year of ceasing work would be eligible for a lump-sum SI allowance.

Under this option, the payers could withdraw the SI allowance for the entire period but would not be entitled to a pension.

This option would not limit the one-time SI payment withdrawal, adversely affecting the social welfare system and piling pressure on the State budget to pay pensions, said the ministry.

Meanwhile, the second option would allow the employees to make a lump-sum withdrawal at a maximum of 50% of the period they had paid for the retirement and survivorship allowance fund. The remaining period would be reserved for pension enjoyment when the employees satisfy the age requirement.

The experts said this method would help reduce the preliminary payments made by the SI fund; however, this option may receive strong reactions from the employees.

Those with SI payment under the full 20 years who settle abroad or suffer from a fatal disease could opt to receive a lump-sum social insurance payment or monthly SI allowance.

The allowance will be based on the number of years of SI premium payment and the average monthly salary for SI payment.

Till the end of 2022, there were 17 million persons participating in the SI nationwide, covering 38% of the working-age population. The Vietnam SI targeted to raise the SI coverage to 60% in 2030.

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