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For workers on unstable and risky jobs, they might find that letting the business pay their social insurance payment is too complex, especially on the basis that they might change jobs quickly, or the business themselves don’t want to pay social insurance for ‘part-time’ employees, etc. Accordingly, the employees can choose to pay voluntary social insurance themselves directly to the government, without a ‘middle man’.
According to Clause 3, Article 3 of the Law on Social Insurance 2014, Voluntary social insurance means a form of social insurance organized by the State in which a participant may select a premium rate and a method of premium payment suitable to his/her income and the State supports his/her payment of social insurance premiums for him/her to enjoy retirement and survivor allowance regimes.
Pursuant to Circular 01/2016/TT-BLDTBXH issued on February 18, 2016, subjects participating in voluntary social insurance (as defined in Clause 1, Article 2, Decree No. 134/2015/ND-CP) are Vietnamese employees aged full 15 years or older and are not subject to compulsory social insurance participation in accordance with the law on social insurance.
The rate of payment of voluntary social insurance
The rate of payment of voluntary social insurance varies at different times depending on the actual situation of the society. Accordingly, the employees need to update information regularly in order to keep up with the latest change in the voluntary social insurance regulation.
Currently, the voluntary social insurance premiums are specified in Clause 1, Article 10, Decree No. 134/2015/ND-CP and specifically guided in Article 9, Circular 01/2016/TT-BLDTBXH as follows:
- The monthly payment is equal to 22% of the monthly income chosen by the participants of voluntary social insurance.
- The minimum monthly income selected by participants of voluntary social insurance is equal to the poverty line of rural areas as prescribed by the Prime Minister and the highest is 20 times the base salary at the time of payment.
The formula for calculating the rate of payment of voluntary social insurance is as follows:
Monthly voluntary social insurance payment = 22% x monthly income chosen by the participants of voluntary social insurance.
The formula to calculate monthly income chosen by the participants of voluntary social insurance = The poverty line of rural areas at the time of payment + m (natural parameter with values from 0 to n) x 50,000 (VND/month)
In 2021, the poverty line in rural areas in Vietnam is 700,000 VND/person/month and the base salary is 1,490,000 VND/person/month. Accordingly, we can calculate the lowest amount of monthly payment of voluntary social insurance in 2021 as follows:
- The lowest monthly payment of voluntary social insurance in 2021 is 22% x 700,000 = 154,000 VND/month.
- The highest level of voluntary social insurance in 2021 is 22% x (20 x 1,490,000) = VND 6,556,000/month.
How does an employee pay voluntary social insurance?
Normally, the business will pay the required social insurance for the employees and the employees do not need to pay it themselves. However, on voluntary social insurance, the employees need to personally plan their strategy to pay for voluntary social insurance.
Basically, the employee can choose one of the following payment methods:
1.1. Monthly payment (Must be paid within the month);
1.2. Pay every 3 months (Must be paid in the first 3 months);
1.3. Pay every 6 months (Must be paid in the first 4 months);
1.4. Pay once every 12 months (Must be paid in the first 07 months);
1.5. Pay once for many years to come, but not more than once every 5 years;
1.6. One-time payment for the missing years, for participants of social insurance who have fully met the age conditions for pension enjoyment as prescribed, but the missing payment period of social insurance contributions do not exceed 10 years (120 months), shall be paid for full 20 years to receive a pension.
In case a social insurance participant has reached the prescribed retirement age but the time of payment of social insurance premium is lacked over 10 years or more, if they wish, he/she shall continue to pay voluntary social insurance premium by one of the methods specified in Points 1.1, 1.2, 1.3, 1.4 and 1.5, until the missing period of social insurance payment is not more than 10 years, then they are entitled to one-time payment for the missing years to enjoy the pension as prescribed at Point 1.6 of this Section.
Participants of voluntary social insurance may change the payment method or monthly income as the basis for payment of voluntary social insurance after completing the previously selected payment method.
ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.
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