Amend the Social Insurance Law to ensure social security and fund safety.

Continuing the working agenda, on the afternoon of October 23, the National Assembly discussed in the plenary session some remaining points of disagreement in the draft Law on Social Insurance (amended).

Expanding the scope of social insurance coverage.

The report on the acceptance, explanation, and revision of the draft Law on Social Insurance (amended) by the Standing Committee of the National Assembly shows that including workers employed under seasonal labor contracts or for specific jobs with a duration of 1 month to less than 3 months in compulsory social insurance is necessary to further expand the scope of social insurance participation and ensure social security for workers when they are no longer able to work.

National Assembly representative Bui Sy Loi from Thanh Hoa province speaks during the discussion of the draft Law on Social Insurance (amended). Photo: VNA.

Many delegates agreed with this view and argued that this group of workers mainly works in the labor relations sector, but in reality, employers often exploit the practice of signing labor contracts of less than three months to avoid fulfilling social insurance obligations because the current law does not stipulate that workers working under seasonal contracts are subject to mandatory social insurance contributions, causing disadvantages for these workers.

Representative Bui Sy Loi (Thanh Hoa) noted that this workforce is very large, and if it is not included in the Law, it would inadvertently exclude them from policy. However, there are still many concerns about the feasibility of this regulation due to the complexity of managing this group and the limited application of information technology in labor management.

Representative Nguyen Trung Thu (Long An) argued that, to ensure feasibility and smooth implementation of policies, it is necessary to anticipate potential difficulties and develop appropriate solutions to better bring policies into practice.

Managing these entities is extremely complex, resulting in numerous small employers, employees constantly changing jobs and workplaces, while the equipment, technology, and management expertise of social insurance are still limited. This creates many difficulties in management, and when management is not effective, it easily leads to corruption, abuse, and fraud.

Regarding the inclusion of part-time workers at the commune, ward, and town levels in social insurance, while the National Assembly Standing Committee leaned towards the option of requiring this group to participate in voluntary social insurance, many delegates argued that part-time workers at the commune level should be required to participate in compulsory social insurance.

Explaining this, delegates Nguyen Trung Thu (Long An), Nguyen Thanh Hai (Hoa Binh), Nguyen Anh Son (Nam Dinh), and Le Trong Sang (Ho Chi Minh City) argued that non-professional personnel at the commune level currently receive allowances based on their work, many have relatively long working histories and hold important positions in the commune government apparatus. They also have to work full-time like civil servants.

The agencies within the political system at the commune level are also employers, directly assigning tasks to officials and non-professional workers, who are also employees and have the responsibility to complete assigned tasks.

Essentially, this relationship has given rise to a labor relationship. Within the same commune, differences in salary and allowance systems, and mandatory versus voluntary social insurance schemes, will affect the morale and sense of responsibility of the staff, making it difficult to attract and retain personnel.

Sharing the same viewpoint, delegates Nguyen Thi Thu Hang (Nam Dinh) and Nguyen Thi Phuc (Binh Thuan) both argued that currently, the commune level is where the policies of the Party and State are directly implemented. Most commune-level officials work stably and long-term, often working full days, even on holidays, while only receiving an allowance of 1.86 and not receiving salary increases. The current social insurance policy does not encourage or attract young, qualified officials to work in local areas.

According to statistics, there are currently nearly 229,600 part-time officials at the commune level nationwide, operating under the regulations of Decree No. 92/2009/ND-CP. If mandatory social insurance contributions are made for both retirement and death benefits, with a total contribution rate of 22% of the basic salary (1,150,000 VND), the state (employer) would contribute 443 billion VND per year, equivalent to a contribution rate of 14%; while employees would contribute 253 billion VND per year, equivalent to a contribution rate of 8%.

Representative Le Trong Sang proposed that the National Assembly assign the Government to summarize and evaluate the non-professional operational structure at the local level as a basis for determining job titles and numbers.

Ensuring the balance of the Social Insurance Fund

While there is strong agreement with adjusting the monthly pension benefit level (Article 56) to address the imbalance in social insurance contributions and benefits, there are also differing opinions on the proposed options.

The Standing Committee of the National Assembly believes that, under the provisions of the Labor Code, it is necessary to minimize adverse impacts on retired workers, especially female workers. The implementation of this regulation must be synchronized with the roadmap for adjusting social insurance contributions (according to Article 90 of the Labor Code) to ensure that the actual pension received by workers does not decrease significantly compared to before.

Furthermore, due to the 5-year difference in retirement age between men and women, gender equality must be ensured when adjusting this policy by developing a roadmap to increase the number of years of social insurance contributions for men from 15 years to 20 years to reach 45% of the average monthly salary used for pension calculation (specifically: 16 years in 2018; 17 years in 2019; 18 years in 2020; 19 years in 2021; and 20 years from 2022 onwards).

Implementing the plan to adjust the monthly pension benefit rate according to the roadmap, starting from 2018, the monthly pension of workers will be calculated as 45% of the average monthly salary used for social insurance contributions, corresponding to 15 years of social insurance contributions for female workers and 20 years of social insurance contributions for male workers. For each additional year, workers will receive an additional 2%, up to a maximum of 75%. This will allow workers time to adapt to policy changes based on the contribution-benefit principle.

Supporting the current pension calculation method, Representative Le Trong Sang argued that the calculation method in the draft Law would harm the rights of workers. With the 2018 pension level, men would receive 45% and women 55% with 20 years of social insurance contributions, which would be lower than those retiring in 2017, which were 10% and 5% respectively. After 5 years of adjustment, male and female workers would need 35 years of social insurance contributions to reach the maximum level of 75%.

Similarly, delegate Nguyen Trung Thu noted that, although some argue that the maximum pension benefit rate of 75% is high compared to other countries and higher than countries with pension insurance, the current pension level is only 75% of the minimum wage, which in reality does not meet the minimum living standard of retirees.

The proposed method for calculating pensions under the draft law will create new inconsistencies. Specifically, workers retiring from January 1, 2018, will see their pensions reduced by 10% compared to those retiring from December 31, 2017.

The delegates proposed maintaining the current method of calculating pensions, where those who contribute to social insurance for 15 years receive 45% of their average monthly salary on which social insurance contributions were based, with a replacement rate of 2% for men and 3% for women.

According to delegate Bui Sy Loi (Thanh Hoa), Clause 4 of Article 56 stipulates that the pension amount must not be lower than the basic salary, thus creating a floor for those participating in social insurance. Currently, in reality, the monthly salary used for social insurance contributions is quite low (only about 60-70% of actual income), while some people receive very high pensions in their final years.

As an example, Mr. Bui Si Loi stated that Nguyen Minh, the General Director of Huda Beer (Hue), is currently receiving a pension of up to 65 million VND per month, higher than the current salary of even high-ranking executives.

He also suggested that, in order to reduce the gap in pension benefits between retirees before and after the new law takes effect, the average pension for retirees should be calculated based on the number of years they live. For example, if someone retires at 54 and their life expectancy is 76, a difference of 19 years, then the average pension should be divided by the 19 years they live. This average pension calculation should not be based on the entire contribution period, but rather on the total social insurance contributions divided by the 19 years they live.

Granting the authority to inspect insurance payments to the insurance agency.

Many delegates agreed with the proposal to assign inspection functions to the social insurance organization, arguing that it is a state agency entrusted with responsibility for the main pillar of social security, managing a very large financial fund related to the social security of tens of millions of workers. It is not a purely professional service unit but a financial organization entrusted by the State with the function of managing, utilizing, and investing the social insurance fund for profit, and providing public services.

Adding the function of inspecting social insurance contributions will create conditions to enhance the responsibility of social insurance organizations, more effectively address current shortcomings in the compliance with social insurance laws, and better protect the rights of workers.

Conversely, Representative Pham Thi Hai (Dong Nai) argued that assigning the function of inspecting social insurance contributions to the social insurance organization is inappropriate and cannot be "dual-natured," acting as both a state agency and a financial organization. This contradicts some current regulations and creates overlap.

Regarding the issue of social insurance management costs, delegates agreed with the proposal that annual social insurance management costs be deducted from the profits generated from investment activities of the fund; the specific amount will be decided by the Government in a report to the Standing Committee of the National Assembly every three years. Furthermore, the Government must report annually to the National Assembly on the management and use of the social insurance fund to ensure that social insurance management costs are used economically, efficiently, openly, and transparently.

The issue that concerned delegate Nguyen Thanh Hai (Hoa Binh) was the percentage allocated for insurance management costs. The delegate requested clarification on whether the allocation would be taken from the total social insurance revenue, or determined as a percentage of the fund's investment growth, or perhaps a specific floor or ceiling for the allocation.

Many other issues related to the monthly salary used for mandatory social insurance contributions, adjustments to monthly pension benefits to address imbalances in social insurance contributions and benefits, and the delegation of inspection authority to social insurance agencies were also raised by delegates at the session.

According to Vietnam+