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The demand for lump-sum social insurance withdrawals by foreign workers in Vietnam is rapidly increasing in the context of migration from developed countries to developing countries becoming one of the main trends in the global labor market. The process of lump-sum social insurance withdrawal is a significant legal issue, requiring an understanding of the social insurance regulations and policies in this country.
According to statistics from the Ministry of Labor, Invalids and Social Affairs, the number of foreign workers in Vietnam has been increasing over the past two decades. With only about 12 thousand foreign workers in 2005, the number of foreign workers in Vietnam had increased nearly sevenfold to 83.6 thousand in 2015, and reached approximately 117.8 thousand in 2019.
The increasing number of workers also marks the need for changes in legal regulations regarding the participation of foreign workers in the social insurance system in Vietnam.
In response to requests from labor representative organizations, unions employing foreign workers in Vietnam, and the requirement to incorporate higher labor standards in line with international conventions and agreements signed by Vietnam, notably the regulations of the International Labor Organization (ILO), Vietnam has drafted and prepared regulations concerning foreign workers in the Social Insurance Law 2014 No. 58/2014/QH13 (“Social Insurance Law 2014“) along with other legal documents such as Decree 143/2018/ND-CP (“Decree 143“) and the Labor Code 2019 No. 45/2019/QH14 (“Labor Code 2019“).
To ensure their rights, foreign workers in Vietnam need to clearly understand the legal provisions regarding lump-sum social insurance withdrawals in Vietnam. This article will analyze the important considerations that foreign workers in Vietnam need to be aware of when carrying out the lump-sum social insurance withdrawal procedures in Vietnam.
Regulations on the Participation of Foreign Workers in the Vietnamese Social Insurance System
According to Decree 143, foreign workers in Vietnam who hold a work permit, a practicing certificate, or a practicing license issued by a competent Vietnamese authority, and who have signed an indefinite-term labor contract or a definite-term labor contract of one year or more with an employer in Vietnam, are required to participate in the Vietnamese social insurance system.
Starting from December 2018, when Decree 143 came into effect, foreign workers in Vietnam must contribute to mandatory social insurance. During this period, foreign workers are entitled to three types of benefits: sickness, maternity, and occupational accidents – occupational diseases. The remaining two types of benefits, retirement and survivorship, have been officially implemented since 2022.
From January 1, 2022, foreign workers in Vietnam are required to contribute 8% of their monthly salary to the retirement and survivorship fund as stipulated in Clause 1, Article 12 of Decree 143.
Cases Where Foreign Workers Can Withdraw Lump-sum Social Insurance
Foreign workers in Vietnam are eligible for a lump-sum social insurance withdrawal in four cases as specified in Clause 6, Article 9 of Decree 143, including:
a) Reaching Retirement Age Without 20 Years of Social Insurance Contributions:
According to Clause 1, Article 54 of the Social Insurance Law 2014, foreign workers who reach the retirement age of 60 for men and 55 for women, without having 20 years of social insurance contributions, are eligible for a lump-sum social insurance withdrawal.
However, as per Clause 2, Article 169 of the Labor Code 2019 and Article 4 of Decree 135/2020/ND-CP, the retirement age for workers in normal conditions will be gradually adjusted to 62 for men by 2028 and 60 for women by 2035, increasing by three months per year for men and four months per year for women (In 2024, the retirement age for men is 61 and for women is 56 years and 4 months).
Foreign workers in Vietnam should pay attention to the annually adjusted retirement age to qualify for a lump-sum social insurance withdrawal under this provision.
For workers engaged in heavy, hazardous, dangerous jobs, or other specific cases, the retirement age may vary.
b) Suffering from Life-Threatening Diseases:
As stipulated in Point c, Clause 1, Article 60 of the Social Insurance Law 2014, individuals suffering from life-threatening diseases such as cancer, poliomyelitis, cirrhosis with ascites, leprosy, severe tuberculosis, HIV that has progressed to AIDS, and other diseases as regulated by the Ministry of Health are eligible for a lump-sum social insurance withdrawal upon request.
Additionally, under Article 4 of Circular 56/2017/TT-BYT, as amended by Clause 1, Article 1 of Circular 18/2022/TT-BYT, individuals with a labor capacity reduction of 81% or more who cannot control or perform daily personal activities independently and require assistance are also eligible for a lump-sum social insurance withdrawal.
c) Meeting Retirement Conditions but Not Residing in Vietnam:
Foreign workers who meet the retirement age and have less than 20 years of social insurance contributions can withdraw their social insurance if they no longer reside in Vietnam.
Unlike Vietnamese workers who must wait one year after ceasing social insurance contributions to qualify for withdrawal, foreign workers relocating abroad do not need to wait to meet the withdrawal conditions.
Based on practical experience, foreign workers should consider the following factors when submitting a request for a lump-sum social insurance withdrawal under this condition:
- Labor Export Does Not Qualify: Workers who no longer reside in Vietnam for labor export reasons will not be eligible for a lump-sum social insurance withdrawal, similar to those traveling abroad for short-term trips.
- Proof of Non-Residence: Foreign workers should prepare visas issued by competent foreign authorities confirming permission to enter for residency purposes, documents confirming nationality application procedures, and/or similar documents or residence permits issued by foreign authorities.
In many cases, foreign workers seeking a lump-sum social insurance withdrawal under this condition may no longer reside in Vietnam when submitting their request. Thus, they cannot directly submit or receive the social insurance payout at the social insurance agency.
Foreign workers should consider contacting legal advisory units experienced in labor and social insurance matters to authorize them to receive the payment according to Vietnamese laws on authorization.
d) Termination of Labor Contract or Expiry of Work Permit/Practicing Certificate without Renewal:
When foreign workers terminate their labor contracts or their work permits, practicing certificates, or licenses expire without renewal, they become eligible for a lump-sum social insurance withdrawal.
This condition is similar to the condition of no longer residing in Vietnam. If foreign workers cannot renew their work permits, practicing certificates, or licenses, they would be fined between VND 15 million and VND 25 million as per Clause 3, Article 32 of Decree 12/2022/ND-CP for continuing to work in Vietnam with an expired permit or without a permit.
The additional penalty is deportation from Vietnam. Employers hiring such workers would face fines ranging from VND 30 million to VND 75 million, depending on the number of foreign workers in violation.
Documents for Lump-sum Social Insurance Withdrawal for Foreign Workers in Vietnam
The documents required for foreign workers in Vietnam to submit a request for a lump-sum social insurance withdrawal depend on which of the four cases they fall under.
For instance, if the worker is suffering from a disease qualifying for a lump-sum social insurance withdrawal as per the Ministry of Health’s regulations, they need to provide medical records summarizing the condition or indicating a disability rate of 81% alongside the basic documents.
If the worker no longer resides in Vietnam, they need to prepare proof of this, such as a copy of the confirmation of renunciation of Vietnamese citizenship or documents showing the non-renewal of a work permit, which must be authenticated by the competent authorities.
The lump-sum social insurance withdrawal dossier for foreign workers includes two main documents: the worker’s social insurance book, which has been finalized or consolidated, and the application form for lump-sum social insurance withdrawal (Form 14-HSB) issued with Decision 166/QĐ-BHXH of Vietnam Social Insurance in 2019.
Form 14-HSB can be downloaded here.
When submitting the dossier for lump-sum social insurance withdrawal, foreign workers need to present their passport translated into Vietnamese and certified as per Vietnamese law.
If the foreign worker submits the application through a legal representative, an authorization document must be included as per regulations.
Procedure for Requesting Lump-sum Social Insurance Withdrawal for Foreign Workers in Vietnam
Foreign workers eligible for lump-sum social insurance withdrawal need to follow these steps:
Step 1: Prepare the Withdrawal Dossier
Foreign workers must prepare a complete dossier as previously analyzed.
Due to the unique and complex legal nature of preparing these documents according to the worker’s conditions, foreign workers should consider using the services of legal consultancy units or law firms to save time and costs, and to ensure the dossier is correctly and comprehensively prepared.
Step 2: Submit the Dossier to the Social Insurance Agency
The place to submit the lump-sum social insurance withdrawal request for foreign workers in Vietnam is the local social insurance agency where the worker is registered.
According to Point 2, Clause 2, Article 26 of Decision 636/QĐ-BHXH, foreign workers submit their dossier to the district/provincial social insurance agency (if the provincial agency is authorized to handle lump-sum social insurance withdrawal) where they have their household registration or temporary residence book.
Workers can submit their dossiers by mail or directly at the social insurance agency.
Step 3: Social Insurance Agency Reviews the Dossier
To ensure that foreign workers meet the conditions for lump-sum social insurance withdrawal, the social insurance agency is responsible for processing the dossier and arranging payment for the foreign worker or providing a written explanation if the request is not processed.
The agency must complete this within a maximum of 10 days from receiving a complete and valid dossier from the foreign worker. However, in practice, this period may be extended.
Once the dossier is confirmed to be complete and valid, the foreign worker or their authorized representative will receive an appointment slip detailing the results of the withdrawal request, the payment time, and the payment method for the lump-sum social insurance.
At the time specified in the appointment slip, the social insurance agency will process the dossier and disburse the social insurance amount to the worker or explain the reasons for non-payment and provide a new payment appointment.
Social Insurance Benefits for Foreign Workers
According to Clause 7, Article 9 of Decree 143 and Clause 2, Article 60 of the Social Insurance Law 2014, foreign workers in Vietnam are entitled to social insurance benefits similar to Vietnamese workers.
The lump-sum social insurance benefit is calculated based on the number of years of social insurance contributions, as follows:
- 1.5 months’ average monthly salary for each year of contributions before 2014.
- 2 months’ average monthly salary for each year of contributions from 2014 onward.
If the contribution period is less than one year, the lump-sum social insurance benefit equals the total contributions, with a maximum of two months’ average monthly salary.
The withdrawal amount is calculated as follows:
Withdrawal Amount=(Average Monthly Salary×1.5×Years of Contribution Before 2014)+(Average Monthly Salary×2×Years of Contribution From 2014)Withdrawal Amount=(Average Monthly Salary×1.5×Years of Contribution Before 2014)+(Average Monthly Salary×2×Years of Contribution From 2014)
Foreign workers should ensure they prepare all necessary documents and follow the correct procedures to successfully withdraw their social insurance contributions.
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