Needing money to solve immediate needs, having enough time to continue paying to receive pension after withdrawal, and being unclear about the policy are the reasons why young people often withdraw social insurance at one time.
Mr. Le Van Chinh is currently 34 years old but has withdrawn his insurance twice. The first withdrawal was in 2012 when he had only worked for two years when the company burned down and he lost his job. The second withdrawal was when he had been working again for seven years when his parents in the countryside told him they needed money to repair their house.
"I immediately thought of insurance because I had no savings," said Mr. Chinh. He quit his job, received unemployment benefits, applied for seasonal work and waited for a year to withdraw his money. After receiving the benefits twice, he applied for a job as a worker at the Thong Dung shoe factory (Binh Duong), continuing the third insurance payment process.
Mr. Chinh is one of nearly 4.85 million people who have withdrawn their social insurance (SI) at one time in the period of 2016-2022, according to statistics from the Ministry of Labor, War Invalids and Social Affairs. By age, the largest withdrawal group is concentrated in the 30-40 age group with more than 40%. This rate is second in the 20-30 age group with more than 37%. Most have participated for less than 10 years.
This agency assessed that the number of people receiving early one-time social insurance benefits could continue to increase. The reason is that at a young age, most workers are more concerned with immediate needs than receiving pensions when they are old. Also due to financial pressure and changes and interruptions in work, the average number of people receiving one-time social insurance benefits is still young.
In addition, the report also shows that many workers returned to continue paying after withdrawing, but there were also many cases of continuing to withdraw 2-3 times. Specifically, 1.3 million people returned, continued to work and pay social insurance, but up to 907,000 workers withdrew twice and more than 61,000 people withdrew three times.
According to Mr. Chinh, those who have withdrawn once "can easily withdraw a second or third time" because the starting salary of young workers is low, so they do not regret quitting their jobs. A worker who has worked for 2-3 years decides to quit and withdraw, then returns to the company, the starting salary is not much different. Every time they are short of money, they think about paying insurance.
"An income of 10 million per month is still a concern, but a young worker's salary of 4-5 million is not much to think about," said Mr. Chinh.
Meanwhile, Mr. Tran Thanh Son, Chairman of the Trade Union of Song Ngoc Garment Company (Binh Tan District), said that young workers often withdraw money at once because their immediate needs are quite high but they have not yet saved. Witnessing many workers quit their jobs to wait to withdraw their insurance, he conducted a survey to find the cause and got the answer that "up to 90% said they used the money to buy phones and motorbikes, only a few were in real urgent difficulty".
According to Mr. Son, some young workers lack knowledge of social security and are vague about policies, so they are easily influenced. However, there are also people who calculate very carefully. Currently, pensions are calculated based on the entire participation process. For workers who have worked for 10-15 years, the salary used as the basis for payment is low, almost based on the regional minimum.
"They quit their jobs, withdraw their money at once during the low-wage period, deposit it in the bank, and then continue to pay," said Mr. Son. Especially when the minimum number of years of contribution is expected to be reduced to 15 years, and the retirement age is 60 for women and 62 for men, 35-year-old workers still have 25 years to start the new participation process.
Workers withdraw social insurance at one time in Thu Duc, December 2022. Photo: Thanh Tung
Research by the International Labor Organization (ILO) in Vietnam on one-time social insurance also shows that most people withdrawing are between the ages of 20 and 39. Receiving one-time social insurance early is something that can be expected because young people often think less about the need for pensions in old age.
According to the ILO, for this reason, the compulsory social insurance system was established. Countries that do not allow one-time benefits like Vietnam do so to avoid short-term planning. In addition, the policy encourages workers to contribute as early as possible without waiting until old age, when it may be too late to secure a pension.
According to research, when young workers withdraw at once, the time they contribute is lost. When they return to the system, they will face the problem of not accumulating enough time to ensure the conditions for receiving pension, so they have more incentive to withdraw at once.
Ms. Vu Kim Xanh, 54 years old, living in Binh Tan district, is a similar case. In 2005, after participating in insurance for more than 9 years, she quit her job and withdrew her insurance at once. At that time, the minimum number of years to receive a pension according to regulations was 15 years, so at the age of 35, the female worker thought she was able to continue paying for a new period.
After that, she was hired by a garment company and continued to pay insurance. In 2017, her health was poor and she had to quit her job after only 12 years of paying insurance. At that time, she was 48 years old, and at the same time, the minimum number of years of participation to receive a pension under the new law had increased to 20 years, meaning she was still 8 years short. At this time, her health was poor, she began to think about her pension but was no longer able to participate. More than a year later, she withdrew her insurance for the second time.
"I have paid insurance for more than 20 years and now I have nothing left. I have already spent all the money I withdrew. I don't know what will happen to me in my old age," said Ms. Xanh.
Workers' children at Hung Loi 2 boarding house, Binh Duong. Photo: Thanh Tung
To avoid regretful situations like Ms. Xanh, in addition to limiting the one-time withdrawal of social insurance, ILO believes that policies need to consider short-term support solutions for workers. For example, the state needs to have a subsidy regime for families and children. This is not costly but on the contrary, it is a very suitable investment.
ILO research shows that if a monthly child benefit of 350,000 VND is provided, the amount spent will only account for 0.7% of the insured income, depending on the eligible age. In addition, other studies show that the child benefit is a policy that simultaneously solves the benefits for three generations: children with benefits, parents with more motivation to stay in the system, so they can enjoy short-term benefits, and old age with pensions.
Meanwhile, worker Le Van Chinh said that this is his third time participating in insurance and will stay in the system to wait for his pension, even though many people around him are preparing to retire. "Many people are afraid that death means losing everything, but I don't think that's true," he said.
The second time he withdrew his insurance, while waiting to complete the procedures, Mr. Chinh saw two baskets at the reception counter. One basket was for people like him, the other basket was for the death benefit. He asked the receptionist and was told that it was for the relatives of the insured. That is, when the worker dies, in addition to the funeral expenses, the family will receive a one-time subsidy, children under 18 years old, and elderly parents will receive a subsidy. Therefore, the male worker suggested that more propaganda should be done so that workers like him can understand the policy.
Le Tuyet
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