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 their benefits once 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 law.

Option two , workers are paid 50% of the total time into the Pension Fund for the death of their children, the rest is reserved in the system to enjoy the regime 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 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Regarding the 50% level, which is neither higher nor lower, the Drafting Committee found that if the amount is withdrawn higher, the reserved portion will be insignificant, and the pension will be low later; if it is withdrawn lower, workers will react because the small amount of money is not enough to solve urgent needs.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 Pension Fund for the Dead (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 at present.

In addition, not all workers 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 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 one-time benefit according to current regulations. 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 said 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 about whether it is the employer's contribution or not.

Workers complete documents to withdraw social insurance at one time in Ho Chi Minh City, end of 2022. Photo: Dinh Van — Workers complete documents to withdraw social insurance at one time 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 resolved for 5 years and this period will be considered as 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 period of continued payment, the worker will enjoy maternity and sick leave 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 pension; or receive monthly benefits. The drafting agency is proposing two options to calculate the level of this benefit 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," Mr. Cuong said, 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 is needed, not to allow immediate withdrawal 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 time while looking for a new job.

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.

Hong Chieu

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