How have social insurance contribution rates changed?

What are the specific changes to social insurance contributions? Will I receive a higher pension in the future? Will my pension be able to keep pace with the annual inflation rate?

Explaining these questions, Ms. Tran Thi Thuy Nga - Director of the Social Insurance Department (Ministry of Labor, Invalids and Social Affairs) said:

- The new Social Insurance Law came into effect on January 1, 2016. This law was developed based on the provisions of the 2006 law but includes many provisions aimed at better ensuring the rights of workers to participate in and benefit from social insurance.

Ms. Tran Thi Thuy Nga - Photo: Thanh Ha

These include expanding the scope of mandatory participation, increasing the duration of maternity leave, adding regulations on maternity benefits for male workers whose wives give birth, increasing the lump-sum social insurance benefit, and providing financial support for voluntary social insurance participants.

The pension system has also undergone several changes, including changes in the method of calculating pension benefits. However, these changes apply to those retiring from January 1, 2018, with a gradual increase in the required social insurance contribution period to reach the maximum pension benefit rate of 75% (35 years for male workers and 30 years for female workers).

* With the new regulations on how to calculate the salary used as the basis for social insurance contributions, will employees' contributions increase from next year?

- The social insurance contribution rate will remain unchanged, but the base salary for social insurance contributions will change from January 1, 2016. Specifically:

From January 1, 2016 to the end of 2017, the monthly salary used for calculating social insurance contributions will be the salary and salary allowances stated in the labor contract.

From January 1, 2018 onwards, the monthly salary used for calculating social insurance contributions will be the salary, salary allowances, and other supplementary payments specified in the labor contract.

According to regulations, out of the total 26% contribution to the social insurance fund, employees contribute 8%, and the remaining 18% is contributed by employers. Thus, the amount employees contribute to social insurance under the new regulations will increase slightly, while their social insurance benefits will be significantly improved.

* If the base salary for social insurance contributions has been increased to result in higher pensions, why is it necessary to increase the social insurance contribution period from 25 years to 30 years for female workers and from 30 years to 35 years for male workers, Madam?

- Compared to other countries in the world, Vietnam's pension calculation formula is considered generous. For each year of social insurance contributions, female workers receive an average of 3% of their pension (75% after 25 years of contributions) and 2.5% per year for male workers (75% after 30 years of contributions). The average rate in other countries is 1.7%.

Vietnam's maximum pension benefit rate is also higher than that of other countries. Meanwhile, the current average retirement age is low, averaging 54.2 years (55.6 years for men and 52.6 years for women). Adjusting the social insurance contribution period by an additional 5 years to reach the maximum pension benefit rate of 75% is necessary.

* Many argue that relying solely on increasing contributions and extending the period of social insurance contributions from workers to improve the pension fund will be ineffective and place a heavy burden on those contributing to social insurance. What are your thoughts on this?

- The new Social Insurance Law introduces several solutions to address the imbalance in the pension and death benefit fund. Adjusting the social insurance contribution period to achieve the maximum pension benefit rate of 75% is just one solution, not the only one.

Furthermore, enhancing the efficiency of social insurance management through the promotion of information technology applications, administrative procedure reforms to minimize management costs, increase investment efficiency, and ensure transparency in the social insurance system are also quite specifically stipulated in the Social Insurance Law. It can be said that adjustments to the regulations on social insurance contributions and benefits to ensure the sustainability of the social insurance fund at this time are absolutely necessary.

* Many people believe that pensioners only receive their pensions after 25-35 years; will this amount be adjusted for inflation?

- Annually, based on the consumer price index published by the General Statistics Office, the Ministry of Labour, Invalids and Social Affairs issues a circular guiding the adjustment of wages subject to social insurance contributions. For example, in 2013, pensions were adjusted upwards by 9.6%; in 2015, retirees received an additional 8% increase while the base salary remained unchanged.

* Since 2016, the government has advocated for expanding the scope of participation. What policies will be implemented to attract individuals to voluntarily contribute to social insurance?

- First of all, it must be affirmed that the target group for voluntary social insurance includes all Vietnamese citizens aged 15 and above who are not subject to mandatory social insurance. Therefore, the target group for voluntary social insurance is very broad, including farmers, self-employed workers, domestic helpers, street vendors, etc.

To encourage and facilitate more people to participate in voluntary social insurance, the new Social Insurance Law adds many regulations such as removing the age limit for participation, setting a minimum income threshold for social insurance contributions to better suit the financial capabilities of many workers; and providing more flexibility in payment methods.

In particular, the new Social Insurance Law stipulates that the State has a policy to support the contributions of participants, and the Government specifies this content to suit the budget capacity in each period.

Abolishing 11 types of procedures related to social insurance and health insurance.

The Vietnam Social Security agency has just decided to abolish 11 procedures related to social insurance and health insurance. Most of these procedures were issued between 2012 and 2014, but were considered cumbersome, unnecessary, and inconvenient for those receiving social and health insurance benefits.

Accordingly, the abolition of these 11 procedures will take effect from October 1st. The abolished procedures include: power of attorney or documents confirming legal representation for patients regarding health insurance payments; health insurance expense payment requests; requests for retroactive claims for pensioners and recipients of monthly social insurance benefits; requests for signature verification and school enrollment certificates for those aged 15-18 still attending school and receiving monthly survivor benefits...

Besides abolishing 11 types of procedures, Vietnam Social Security announced that it has also reviewed and streamlined the process of receiving social insurance and health insurance benefits.

According to Tuoi Tre newspaper