Warning about disadvantages when withdrawing social insurance at one time

Minh Quan• April 17, 2023 09:28

(Baonghean.vn) - Recently, the number of people withdrawing social insurance at one time has increased nationwide and in Nghe An province in particular. This is not only a disadvantage for the workers themselves but also affects the social security goals of the Party and the State.

Withdraw social insurance once just to solve immediate difficulties

Mr. HKD (Ha Huy Tap ward, Vinh city) said that he is a worker and has participated in compulsory social insurance for more than 10 years. In general, workers' salaries are not high, so the social insurance contribution is also low. Meanwhile, the family's current situation is difficult, the amount of social insurance received at one time will solve some immediate problems in the family. Mr. D. shared: "After much hesitation, withdrawing social insurance at one time is not desirable, but the situation is too difficult".

Similarly, Ms. NKN in Nghi Thuan commune (Nghi Loc) used to work as a worker at a company in the district and participated in social insurance for 4 years. When the company encountered difficulties, and at the same time, she felt that she was no longer suitable to be a worker, she quit her job. Due to having no monthly income and facing many immediate difficulties, Ms. N. submitted an application to receive a one-time social insurance payment.

People come to do procedures at the one-stop department of Nghe An Social Insurance. Photo: Dinh Tuyen

Recently, the number of people requesting one-time social insurance benefits in the province has tended to increase. In 2022, the provincial Social Insurance sector received 19,412 applications for one-time social insurance benefits. In the first 3 months of 2023, this number was 6,585 applications, an increase of 39.8% over the same period in 2022.

According to statistics from Vietnam Social Security, workers receiving one-time social insurance are concentrated in the age group of 20-40 (accounting for 80.9%), of which the largest concentration is in the 20-30 age group (accounting for 42.7%), the 30-40 age group accounts for 38.2%. This shows that workers withdraw one-time social insurance at a young age.

The reason is that the difficult life due to the Covid-19 pandemic has caused many workers to request a one-time social insurance payment to have some money to spend and cover their living expenses. In addition, a few people, for immediate benefits, want to withdraw their social insurance payment at once to have some money and hope to find another opportunity. Some workers think that waiting too long to receive their pension. Despite being carefully advised, workers still request a one-time settlement.

Loss of many benefits

According to the representative of Nghe An Provincial Social Insurance, the social insurance policy brings benefits to employees that no other savings can compare to. Currently, for employees participating in compulsory social insurance, the contribution to the social insurance fund is equal to 25.5% of the employee's monthly salary, of which the employee contributes 8% and the employer contributes 17.5%. Specifically, if the employee's salary is 5 million VND/month, the monthly contribution to the social insurance fund is 1 million 275 thousand VND. Of which, the employee contributes 400 thousand VND and the employer contributes 875 thousand VND.

When participating in social insurance, employees are entitled to the following benefits: Sickness, maternity, work accidents, occupational diseases, retirement and death. In particular, when meeting the prescribed conditions, employees will enjoy retirement benefits with many long-term benefits. With the social insurance contribution level as in the example above, just calculating the maximum pension that employees receive, equivalent to 3.75 million VND/month, is much larger than the amount that employees have to pay, which is 400 thousand VND/month.

Nghe An Social Insurance officers advise people to participate in Social Insurance and Health Insurance. Photo: Duc Anh

For self-employed workers, when participating in voluntary social insurance, workers can choose the contribution level that suits their conditions, the lowest being equal to the poverty line in rural areas (currently 1 million 500 thousand VND). Thus, with a monthly contribution rate of 22%, the minimum monthly contribution is 297,000 VND (the State has supported 10%), but the maximum pension rate is up to 75% of the average contribution level.

In addition, pensioners are also granted a free Health Insurance Card during the pension period with a benefit rate of 95% for medical examination and treatment. Relatives are entitled to death benefits when the social insurance participant passes away.

When receiving social insurance at one time, although the employee will have a sum of money to cover immediate expenses, he will lose the opportunity to enjoy retirement benefits when he reaches retirement age. In addition, the person receiving social insurance at one time must accept a huge disadvantage.

First of all, there is a disadvantage in terms of benefits. The amount of money received in one-time social insurance will be much less than the amount of money paid in social insurance. Specifically, in 1 year, the social insurance payment is equal to 2.64 months of salary, while the employee only receives an amount equivalent to 1.5 months of salary for the years paid before 2014 and 2 months of salary for the years paid from 2014 onwards. Thus, the employee loses 0.64 months of salary for each year of receiving one-time social insurance. If compared with the additional savings to receive a pension, the disadvantage is incalculable.

In addition, the period of social insurance payment that has been calculated for receiving one-time social insurance is not counted as the period used as the basis for calculating other social insurance regimes. Currently, there are many cases where people who have received one-time social insurance want to pay back the money to restore the number of years of social insurance participation to be eligible for pension, but the law on social insurance has not yet regulated this case.

In addition, workers also lose the opportunity to receive a monthly pension when they reach retirement age or if they are eligible, the pension level is low, due to the deduction of the social insurance payment period received once, leading to having to depend on their children or relatives when they are no longer able to work. Not only that, when withdrawing social insurance one time, workers also lose the opportunity to be granted a free health insurance card (with a benefit of 95% of medical examination and treatment costs) during the pension period for health care; relatives are not entitled to funeral benefits and death benefits if the person who received social insurance one time unfortunately passes away.

The most effective way to have a peaceful old age, not dependent on children and grandchildren, is to have a stable financial source through monthly pension when you retire, and be granted a Health Insurance Card to take care of your health during the pension period. Therefore, Nghe An Provincial Social Insurance recommends that employees should consider carefully before deciding to receive a one-time social insurance payment.
For workers who are facing economic difficulties, they should receive unemployment insurance and take advantage of the State's support packages. If they no longer participate in businesses or units, they should switch to voluntary social insurance, choose a level of contribution that is suitable for them, and maintain it so that they can receive a pension when they are old.
In the long term, the Social Insurance Law is currently being considered for amendment, which allows for 15 years of contributions to be eligible for pension, so workers who are patient for a while longer will receive the results of their social insurance contributions.