Pouyuen Union: 'Workers panic when hearing about insurance being reduced to 50%'

Ho Chi Minh City workers will be shocked if they choose to withdraw their social insurance at a lump sum of 50% because they believe their benefits will be reduced, according to the Chairman of the Pouyuen Vietnam Company's union.

The content was stated by Mr. Cu Phat Nghiep, Chairman of the Trade Union of Pouyuen Vietnam Co., Ltd. (Binh Tan District), at the meeting of the Ho Chi Minh City National Assembly Delegation with voters who are workers and business owners on the afternoon of October 18.

Pouyuen is the city’s largest employer, with more than 90,000 employees at one point. It was also the site of a work stoppage in 2015 in response to Article 60 of the 2014 Social Insurance Law. The National Assembly then issued Resolution 93, allowing workers to withdraw their insurance after one year of unemployment.

Chairman of the trade union of Pouyuen Vietnam Company Cu Phat Nghiep. Photo: An Phuong

The draft revised Law on Social Insurance currently has two options for one-time withdrawal of social insurance. Option one, only those who participated before the law took effect (expected before July 1, 2025) can withdraw. Those who contributed after this time cannot withdraw, except for those who are of retirement age but have not contributed enough years to receive pension; those who have settled abroad; those who have life-threatening illnesses.

Option two, regardless of the payment period, all workers who have paid for less than 20 years, after one year of not participating in the system, can withdraw but not more than 50% of the total time paid into the Pension and Death Fund. The remaining years are reserved to enjoy the regime.

Mr. Nghiep said that many workers have the mentality of withdrawing insurance, so when mentioning the option of withdrawing but not more than 50%, they will be worried.

"They don't care about the next part anymore and will quit their jobs en masse to withdraw. This is even more risky for the insurance system and businesses lacking production workers," said Mr. Nghiep. Through a survey of workers' opinions, the Pouyuen union proposed choosing option one.

According to Mr. Nghiep, in the short term, this plan will help stabilize the situation. In the long term, the government needs to provide information about more attractive policies for pensioners so that they can stay in the system. In particular, those who participate from July 1, 2025 will no longer be able to withdraw. Thus, Vietnam will gradually move towards a complete resolution of the situation of withdrawing social insurance at one time.

Workers at Pouyuen Company, Binh Tan District after work, 2021. Photo: Quynh Tran

"I support workers having pensions when they retire," said Mr. Nghiep. In the past, to promote his message to workers, he always compared receiving pensions when they retire and withdrawing them in one lump sum, illustrating from the company's case. People with pensions will be more confident, health insurance will take care of them for life, and when they die, they will have burial expenses and death benefits, so they "won't be a burden to anyone". People who withdraw them in one lump sum spend it all, and now they have to ask their children for a cup of coffee.

"Many workers understand that they will continue to work and have accumulated more than 20 years of experience, so they will definitely stay in the system," said Mr. Nghiep.

Similarly, Mr. Tran Anh Kiet, Chairman of the Trade Union of Hitachi Zosen Vietnam Co., Ltd. (District 1), said that this time the law amendment needs to choose an option to help end the situation of withdrawing social insurance at one time.

"No one in the world allows withdrawal like Vietnam, so why do we keep maintaining it?" Mr. Kiet said and analyzed the reason workers give for withdrawing insurance is that they complain about low pensions. However, pensions follow the principle of contribution - benefit. When working, workers only want to contribute a little more than the regional minimum, so they cannot demand a high pension.

According to Mr. Kiet, the low salary used as the basis for paying insurance has many consequences. Specifically, with the short-term regime, the amount of money received when giving birth or unemployment is low, so workers find insurance unattractive. When they are old, their pension is low, so they want to withdraw it all at once. Therefore, to thoroughly handle the problems, the insurance payment regulations need to be based on actual income.

Sharing the same view, Chairwoman of the Ho Chi Minh City Labor Federation Tran Thi Dieu Thuy said that the pension system follows the principle of contribution - benefit, so "low contribution cannot be high benefit". Therefore, the draft proposed the lowest contribution level to be only half of the regional minimum wage (Region I like Ho Chi Minh City is 4.68 million VND) is unreasonable.

"Workers want to receive pensions at least equal to the regional minimum, but the lowest contribution is only 2.34 million VND, so they are in a dead end," said Ms. Thuy. In addition to raising the minimum contribution, Ms. Thuy suggested that trade unions at enterprises must fight to make the insurance contribution at enterprises equal to actual income to improve the regimes for workers.

Sharing the same view, Ms. Van Thi Bach Tuyet, Deputy of the National Assembly Delegation of Ho Chi Minh City, said that the situation of separating salaries and adding allowances to avoid paying insurance is very common.

"I went to supervise, the company said it did so because of the consensus of the workers," Ms. Tuyet said, adding that "splitting" salaries to pay low insurance only benefits the company because it pays 21.5%. As for the workers, who pay 10.5%, they may receive a little money in the short term, but in the long term, they will suffer a lot, especially because their pensions are very low.

From there, Ms. Tuyet suggested that when participating in building the salary scale, the union must include fixed incomes in the salary for insurance contributions. Along with that, the union organization must explain to the workers. In addition, social insurance needs to cooperate with tax authorities and banks to trace the actual salary of workers, ending the situation where a business has 2-3 salary tables.

The revised Social Insurance Law Project is expected to be discussed by the National Assembly at the October 2023 session, approved at the May 2024 session, and take effect from July 1, 2025.

Le Tuyet

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