Plan to narrow the scope of insurance payment for business owners

The latest revised Social Insurance Bill proposes to only include business owners with registered businesses in the compulsory social insurance (SI) category, eliminating the unregistered group.

In the latest draft of the revised Social Insurance Law sent to the Ministry of Justice for review in June, the Ministry of Labor, War Invalids and Social Affairs proposed to include groups of household heads with business registration, business managers, managers and operators of cooperatives who do not receive salaries, and part-time workers in the mandatory contribution category. These people do not have labor contracts and do not receive salaries, so they have not participated in mandatory social insurance.

People who pay compulsory social insurance will enjoy full benefits for retirement, death, maternity, sickness, occupational diseases, and unemployment.

Compared to the draft in March, the draft law, after synthesizing and receiving opinions, has had some changes. Specifically, the scope of compulsory contributions is narrowed to the group of household heads with business registration, not all, and does not apply to people who have reached retirement age. With this new proposal, the number of household heads participating in compulsory social insurance will decrease to nearly 2 million instead of 5 million as originally planned.

Mr. Nguyen Duy Cuong, Deputy Director of Social Insurance Department, Ministry of Labor, War Invalids and Social Affairs, explained that the country has about 5 million business households divided into two groups. The group with business registration is about 2 million, with revenue of over 100 million VND per year and is paying taxes. The remaining group is not registered, has low revenue such as agricultural, forestry and self-employed households.

The proposal to narrow the group of households with registered businesses to ensure feasibility in management and implementation, when linked with the database of the business and tax management system. "If all households are included in the group of households, it will be very large and difficult to manage, not to mention collecting mandatory payments," said Mr. Cuong.

The salary used as the basis for social insurance contributions for this group is at least half and at most 8 times the minimum wage of region I (currently 4.68 million VND). Compared to the original draft, the contribution level has changed, no longer fixed at 2-36 million VND. This group deducts 25% of their salary as the basis for social insurance contributions each month, including 22% to the Pension Fund for Deaths and 3% to the Sickness and Maternity Fund.

"There will be specific instructions on how to collect the fee later, and it may be possible to consider authorizing it through a management agency like people working abroad," said Mr. Cuong.

Traders in front of flower stalls at Quang Ba market (Hanoi), January 2023. Photo: Giang Huy — Traders in front of flower stalls at Quang Ba market (Hanoi), January 2023. Photo: *Giang Huy*

Former Deputy Minister of Labor, War Invalids and Social Affairs Pham Minh Huan said that narrowing the conditions for the group of householders with business registration is appropriate, but unfortunately, it leaves out householders who do not register their business and want to participate in compulsory social insurance. In the long term, the law should consider gradually expanding to include this group.

He proposed that the group of household heads should not necessarily pay and receive at the old rate but should design different rates so that they can choose. Household heads when included in the mandatory payment category are mainly 30-40 years old, few are in their twenties. Their number of years of participating in social insurance is therefore very short and when they reach retirement age, they may not have enough years of payment, easily falling into the group of voluntary one-time payment for the remaining time to receive pension.

If they choose a low contribution rate, with a minimum benefit rate of 45% for 15 years of participation, the pension will be low. At that time, the state will have to adjust or compensate again. Currently, the drafting agency has not taken this into account and still applies the current contribution-benefit rate for the mandatory social insurance sector.

The draft revised Law on Social Insurance is expected to be submitted to the Government in June, submitted to the National Assembly for discussion at the October 2023 session, approved at the May 2024 session and take effect from January 1, 2025.

Hong Chieu

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