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According to the latest draft of the Social Insurance Law, the Government has withdrawn the proposal allowing employees to cover the debts of employers who fail to pay social insurance for them to receive pensions. Instead, the Government proposes having the authority to decide on the beneficiaries, conditions, levels of pension, and survivorship benefits, and the procedures for workers in bankrupt companies or those whose employers have fled or are unable to pay social insurance before July 1, 2024.
In its explanation, the Government acknowledged the complexity of this issue, emphasizing the need to assess the impacts and review and update data on the duration and amounts of unpaid or evaded contributions. The new regulation aims to protect the rights of workers in bankrupt, dissolved companies, or those whose employers have absconded before the enactment of the Social Insurance Law.
To ensure feasibility and avoid setting a bad precedent for companies intentionally evading social insurance contributions, the Government proposes only stipulating the principles in the revised law and leaving the decision to the Government. The funding for these payments will come from the interest that companies must pay when they violate the rules on delayed or evaded contributions.
Previously, the Government proposed that the Social Insurance agency temporarily confirm contribution periods if requested by employees as a basis for enjoying benefits. If the employer later pays the owed contributions, this period would be added back to calculate the benefits. This means that workers would only be credited for the contributions made, without including the period of delayed or evaded contributions.
If the period of delayed or evaded contributions is considered for pension and survivorship benefits eligibility, workers can choose to pay the owed amount into the Retirement and Survivorship Fund to be recognized for these benefits. If the Social Insurance agency later recovers the debt, the benefits will be recalculated, and the workers will be refunded the amount they paid.
Under this mechanism, if workers choose to cover the contributions for pension eligibility, they must pay at least 30% of their monthly salary used as the basis for social insurance contributions into the Retirement and Survivorship Fund. Specifically, 8% of the initial monthly salary was for the worker’s share of social insurance contributions that the employer did not pay, and an additional 22% (8% from the worker and 14% from the employer) to be recognized for the period of unpaid contributions.
National Assembly delegates and social welfare experts argue that this proposal shifts the burden onto the workers, potentially negatively impacting the social safety net. Requiring workers to pay for something they are not at fault for is unreasonable, forcing them to pay twice but receive benefits only once. Most workers owed social insurance are low to middle-income earners, making it difficult for them to cover the additional contributions to receive pensions.
Vietnam needs to evaluate the effectiveness of the inspections conducted by the Social Insurance agency in implementing policies. If these inspections are substantive, why has the situation of evaded and delayed contributions not decreased but increased? Some argue that if the Social Insurance agency allows companies to delay contributions, leading to evasion, the agency should be responsible and use non-worker funds to cover the unpaid amounts for workers.
A popular option among workers, according to surveys, is for the Social Insurance agency to use the interest from the Social Insurance Fund to cover the unpaid contributions. A minority suggests that allowing workers to cover the contributions themselves is not a bad idea, as it provides an option for financially capable workers who wish to participate in the system to enjoy benefits like pensions.
According to the statistics of the Vietnam Social Insurance, delays in social insurance contributions occur across all types of enterprises. Debts difficult to recover from bankrupt, dissolved, inactive companies, or those whose owners have fled amount to over VND 4,000 billion, affecting the rights of more than 213,400 workers.
The revised Social Insurance Law project was discussed by the National Assembly in the October 2023 session, expected to be passed on June 25 and take effect from July 1, 2025.
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