Amendment of the Law on Social Insurance: New Regulations to Benefit Employees

Press conference to introduce the draft Law on Social Insurance featured representatives of many departments and ministries. (Photo: Giap Tong)

Reducing the number of years of paying social insurance

At the press conference, Nguyen Duy Cuong (Deputy Director of the Department of Social Insurance, Ministry of Labour, Invalids and Social Affairs) said, one of the important adjustments of the draft Law on Social Insurance (amended) is to reduce the time that one has to pay social insurance contributions to enjoy a pension from 20 years to 15 years.

“This regulation looks to create opportunities for people from 45 years old to newly join social insurance or those who participate intermittently, leading to a fact that they have reached their retirement age yet still not having 20 years of payment of social insurance to also enjoy a monthly pension,” said Nguyen Duy Cuong.

According to the current Law on Social Insurance, employees who have paid social insurance contributions for less than 20 years are not entitled to a pension. With this breakthrough proposal, it will partly limit the one-time withdrawal of social insurance, employees who have paid social insurance contributions for less than 20 years still have pensions and are also adjusted by the State, and supported with health insurance.

In addition, the proposed adjustment is in line with international practices through the implementation of agreements on social insurance signed between the Government of Vietnam and governments of other countries.

“Notably, there is an agreement on the accumulation of time as the basis for calculating social insurance benefits for employees working in different countries,” said Nguyen Duy Cuong.

Increase the coverage of the compulsory social insurance payment basis

According to Nguyen Duy Cuong, the revised draft of the Law on Social Insurance is oriented more broadly towards the basis of calculation of social insurance contributions, thereby better ensuring the social insurance benefits of employees.

The draft stipulates that the salary used as the basis for payment of social insurance premiums is a monthly salary, including salary and allowances, and other additional income in accordance with the labor law. It is understood that the salary as the basis for payment of social insurance premiums will include additional allowances and other supplements associated with the employee’s working process and performance results.

Nguyen Duy Cuong, Deputy Director of the Department of Social Insurance, Ministry of Labour, Invalids and Social Affairs. (Photo: Giap Tong)

This is a new point compared to the current Social Insurance Law. Accordingly, the Law is stipulating that: from 2018, for employees who pay social insurance premiums according to the salary regime decided by the employer, the monthly salary on which social insurance premiums are based is the salary, salary allowance, and additional amounts according to the provisions of the labor law.

Although the legal documents have detailed instructions on the monthly salary as the basis for paying social insurance premiums, some enterprises still split into many allowances and supplements to avoid paying social insurance premiums.