Why is it proposed to withdraw 50% of social insurance at one time?

The drafting committee has calculated that 8% of the employee's salary contributed to the Pension Fund for the death of the employee is nearly equal to 50% of the one-time social insurance benefit as currently regulated.

Assessing the one-time social insurance policy as a sensitive issue with long-term impacts on social security, the Government submitted to the National Assembly two solutions in the revised Law on Social Insurance.

Option 1 : classify two groups of workers to receive a lump sum. Those who participated before the amended law took effect (expected July 1, 2025) can withdraw one time if they need to after 12 months of unemployment. The remaining group who started working and paying social insurance after July 1, 2025 will not be able to withdraw, except in cases prescribed by regulations.

Option two , workers will be paid 50% of their total time into the Pension Fund for the death of their children, the rest will be kept in the system to enjoy the benefits later.

Explaining the proposal to withdraw 50% of the total time participating in social insurance, Mr. Nguyen Duy Cuong, Deputy Director of Social Insurance, Ministry of Labor, War Invalids and Social Affairs, said that the Drafting Committee analyzed the number of workers leaving the social security net in the period of 2016-2022, showing that nearly 70% of those aged 20-40 have urgent financial needs. Allowing a 50% withdrawal will solve two problems at the same time, ensuring the right to withdraw insurance for workers and still preserving their retirement in the future.

Regarding the 50% level, which is neither higher nor lower, the Drafting Committee found that if the withdrawal is higher, the reserved portion will be insignificant, and the pension will be low later; if the withdrawal is lower, workers will react because the small amount of money is not enough to solve urgent needs.

There is a proposal to limit the one-time withdrawal of social insurance by only settling based on 8% of the employee's social insurance contribution to the Retirement and Death Fund (enterprises contribute 14%). Mr. Cuong analyzed that this regulation would be inappropriate because the contribution rate to the fund is different in each period, before 2010 it was 5%, then gradually increased to 8% as it is now.

In addition, not all employees participating in social insurance contribute 8%. There are groups that contribute the entire 22% to the fund, such as Vietnamese people working abroad under contract, people receiving spouse and consort benefits; there are groups whose agencies contribute 22%, such as non-commissioned officers, soldiers, and students of the People's Armed Forces.

The technical department has tried to calculate that if 8% of the employee's contribution is withdrawn, it will be equal to 0.96% of the average monthly salary for social insurance contributions for each year of participation, which is equal to 48% of the current one-time benefit. The current law stipulates that the one-time benefit is equal to two months of the average salary for social insurance contributions for each year of participation.

Technically, Mr. Cuong thinks that the regulation allowing 50% withdrawal as drafted is more reasonable, so that employees do not have to wonder whether the 14% paid by the enterprise leads to debate whether it is the employer's contribution or not.

Workers apply for one-time social insurance withdrawal in Ho Chi Minh City, end of 2022. Photo: Dinh Van — Workers apply for one-time social insurance withdrawal in Ho Chi Minh City, end of 2022. Photo: *Dinh Van*

Regarding the solution to the policy of 50% of the total time of social insurance contributions reserved in the system , Mr. Cuong gave an example of a worker who has 10 years of social insurance participation and wants to withdraw, the maximum period will be 5 years and this period will be considered erased because all benefits have been enjoyed. The remaining 5 years are reserved in the system, if the worker continues to work and pay social insurance, it will be added continuously. During the continued payment process, the worker will receive maternity and sickness benefits.

If they reach retirement age but have not paid 15 years of social insurance, workers can continue to withdraw social insurance in one lump sum; voluntarily pay in one lump sum for the remaining years to receive a pension; or receive a monthly subsidy. The drafting agency is proposing two options for calculating the level of this subsidy, which is equal to the amount they withdraw in one lump sum or the total amount paid.

"No matter which option is chosen, in the long run, workers' benefits will be accumulated in the system to motivate them to continue participating in the social security net," said Mr. Cuong, adding that the policy of allowing workers to withdraw their social insurance at one time is historical, inherited from the revisions of the Social Insurance Law. To minimize this wave, a roadmap must be set, and it cannot be prevented from being withdrawn immediately because it may encounter social reactions.

Statistics for the period 2016-2021 show that about 99% of workers withdraw their contributions at once after a year of stopping contributions, and most of them work in enterprises. Workers in the private and FDI sectors are under great pressure at work, so they often have the mentality of "job hopping". They often choose to receive unemployment benefits or receive social insurance at a lump sum while looking for a new job.

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

Hong Chieu

Source link