PROPOSALS FOR SI LAW REVISION H N i, 03/8/2012 Proposals for SI - - PowerPoint PPT Presentation

PROPOSALS FOR SI LAW REVISION

• DEPARTMENT OF SOCIAL INSURANCE

Hà Ni, 03/8/2012

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Proposals for SI Law revision

Outline

Part 1 Overview of current SI legislation Part 2 Guidelines and proposals for SI Law revision

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Part 1. Overview of current SI legislation Developm ent of legislation Implement ation of SI legislation I II

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• I. DEVELOPMENT OF SI LEGISLATION
• National Assembly:

Social Insurance Law

• Government:

15 Decrees

• Prime Minister:

03 Decisions

• Ministerial level:

27 Circulars.

• --> Legal documents on SI have been developed

quite timely and adequately, with good quality, which facilitate the implementation of SI policies.

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• II. IMPLEMENTATION OF SI POLICIES

Increasing coverage and managing participants

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Stt Expenditure 2007 2008 2009 2010 2011 1 Compulsory scheme 8.172.502 8.539.467 8.901.170 9.441.246 10.075.568 2 Voluntary scheme 6.110 41.193 81.319 104.518 3 Unemployment insurance 5.993.300 7.206.163 7.930.567

In gerneral, the number of participants in all 3 schemes increases every year, however:

• Compulsory scheme only covers 20% of the labour force.
• Coverage of voluntary scheme increase at an lower rate, most of new

entrance are those who already participated in the compulsory scheme (more than 70%).

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• II. IMPLEMENTATION OF SI POLICIES

Contribution 2

Schemes 2007 2008 2009 2010 2011 1 Compulsory SI fund 23.755 30.939,365 37.487,945 49.549,0 61.116,0

• Sickness and maternity

fund 3.563 4.640,905 5.623,192 6.757,0 8.334,0

• Occupational accidents

and disease fund 1.188 1.546,968 1.874,397 2.252,0 2.778,0

• old-age and survival fund

19.004 24.751,492 29.990,356 40.540,0 50.004,0 2 Voluntary SI fund 10,757 69,362 174,4 240,4 3 Unemployment insurance fund

• 3.510,651

5.400,3 5.730,3

In the period 2007- 2011, contributions collected in all 3 funds show a sharp increase every year, in particular, that of compulsory fund increases 2.5 times.

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• II. IMPLEMENTATION OF SI POLICIES

s Payment of benefits 3

In 5 years from 2007 to 2011, VSS received and provide benefits for:

• More than 600,000 monthly pensioners;
• More than 2.4 million lump-sum receivers;
• More than 20 head-counts receving sickness, maternity

and health care benefits

• More than 22,500 people receiving voluntary SI

benefits

• More than 180,000 people receive unemployment

benefit.

• --------> Details are as follows:

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• II. IMPLEMENTATION OF SI POLICIES

Payment of benefits 3

Type of benefit Unit 2007 2008 2009 2010 2011 (est.) 1 Monthly pensioners Person 106.224 120.806 124.361 133.665 138.791

• Old-age

Person 84.860 99.078 102.286 109.586 112.256

• Survivor

Family members 19.325 19.416 19.644 21.398 23.842

• Occupational accidents and

disease Person 2.039 2.312 2.431 2.681 2.693 2 Lump-sum Person 204.034 385.584 526.509 607.590 593.338

• BHXH mét lÇn

Person 128.441 288.309 425.903 498.122 478.462

• lump-sum at retirement

Person 50.559 68.639 70.646 77.314 79.840

• Occupational accidents and

disease lump-sum Person 2.446 3.021 3.050 3.188 3.604

• Occupational accidents and

disease deaths Person 710 664 549 554 664

• Occupational disease lump-

sum Person 361 371 378 419 386

• Survival lump-sum

Person 21.517 24.580 25.984 27.993 30.382 3 Sickness Head-count 1.989.750 2.512.145 3.250.000 3.914.528 4.350.497 4 Maternity Head-count 298.564 575.811 713.000 661.312 835.752 5 Health care Head-count 748.650 316.420 235.542 221.516 201.083

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• II. IMPLEMENTATION OF SI POLICIES

Payment of benefits 3

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Indicator 2007 2008 2009 2010 2011 Number of participants in compulsory scheme 8.172.502 8.539.467 8.901.170 9.441.246 10.075.568 Number of new entrants a year 1.426.574 366.965 361.703 540.076 634.322 Number of lump-sum receivers 128.441 288.309 425.903 498.122 478.462

Statistics show that on average, there are about 500,000 new lump-sum rceivers, an increase of the same rate of coverage, and gernerally they are on an increase trend over the years. This seems to contradict with the policy of the Party and Government to gradually increase the coverage

• f

social insurance, encouraging people to participate in voluntary SI.

• II. IMPLEMENTATION OF SI POLICIES

Fund balance 3

STT Component funds 2007 2008 2009 2010 2011 I Compulsory SI fund 1 Sickness and maternity + contribution 3.563,248 4.640,9 5.623,2 6.757,0 8.334,0 + expenditure 2.114,913 2.979,1 3.716,1 3.995,2 5.357,0 Exp./con. ratios (%) 59,4% 64,2% 66,1% 59,1% 64,3% 2 Occupational accidents and disease fund + contribution 1.187,749 1.547,0 1.874,4 2.252,0 2.778,0 + expenditure 106,246 144,9 180,5 227,7 291,0 Exp./con. ratios (%) 8,9% 9,4% 9,6% 10,1% 10,5% 3 Old-age and survival fund + contribution 19.003,990 24.751,5 29.990,4 40.540,0 50.004,0 + expenditure 12.243,718 18.235,9 24.522,1 30.939,9 38.493,0 Exp./con. ratios (%) 64,4% 73,7% 81,8% 76,3% 77,0% II Voluntary SI fund + contribution 10,8 69,4 174,4 240,4 + expenditure 0,003 0,6 25,4 26,0 Exp./con. ratios (%) 0,0% 0,8% 14,6% 10,8% III Unemployment insurance fund + contribution

• 3.510,7

5.400,3 5.730,3 + expenditure

• 459,3

1.096,4 Exp./con. ratios (%)

• 8,5%

19,1%

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• II. IMPLEMENTATION OF SI POLICIES

Fund balance for sickness and maternity benefits 3.1

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• Thu (t ñng)

Chi (t ñng) !"#$%&'(%)$*

'+),%-*)%'+ -%" ./0+1%)*,0 -%" ./2#'+,3)%' !"

• II. IMPLEMENTATION OF SI POLICIES

Fund balance for OAC benefits 3.2

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• Thu (t ñng)

Chi (t ñng) !"#$%&'(%)$*

'+),%-*)%'+ -%" ./0+1%)*,0 -%" ./2#'+,3)%' !"

• II. IMPLEMENTATION OF SI POLICIES

Fund balance for old-age and survival benefits 3.3

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• Thu (t ñng)

Chi (t ñng) !"#$%&'(%)$*

'+),%-*)%'+ -%" ./0+1%)*,0 -%" ./2#'+,3)%' !"

• II. IMPLEMENTATION OF SI POLICIES

Data shows that the expenditure/contribution of component funds

• f the SI scheme generally shows a increasing trend. The exception

is for old-age and survival fund in 2010 which decrease because of the increase in contribution rate by 2%. However, on average, in the period 2007-2011, the expenditure of the old-age and survival fund increase in a faster speed its income (total contribution increased 2.3 times during 2007-2011, but total expenditure increased 3.4 times during the same period). The expenditure/contribution ratios

• f

voluntary and unemployment insurance fund do not reflect the real impact of policies because they are new schemes and the number of participants are not as many.

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Evaluation of overall fund balance 4

• II. IMPLEMENTATION OF SI POLICIES

There is a risk of fund imbalance in the long term for the old-age and survival fund. This is because of the following reasons: Firstly, the number of contributors / number of pensioners shows a strong decrease

Evaluation of overall fund balance 4

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217 34 19 14 12 10.97 10.39 9.90 50 100 150 200 250 1996 2000 2004 2007 2008 2009 2010 2011

• II. IMPLEMENTATION OF SI POLICIES

Secondly, the average pensionable age is low (currently, the average pensionable age for both men and women is 53.43) meanwhile, the average years of receiving pension increase (currently the average life expectancy at birth of pensioners is 73.04 and the average years of receiving pension is 20 years). Thirdly, in the past 5 years, retirement pension increased considerably faster than the fund growth rate. On average, during 2007-2012, after 6 times of pension adjustment, the retirement pension has been adjusted to increase by 134% as compared to that of December 2007, meanwhile the fund grows at the rate of less than 10%/year. Forthly, the expenditure/contribution ratios tends to increase considerably

• ver the years.

Evaluation of overall fund balance 4

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Part 2. GUIDELINES AND PROPOSALS TO REVISE THE SI LAW

Guidelines to revise the SI Law I Proposals to revise the SI Law II

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• I. GUIDELINES TO REVISE THE SI LAW

The policy of the Party on social insurance and for the SI Law is reflected in the following documents:

• 1. Resolution No. 21-NQ/TW of the Central Executive Committee of the

Communist Party (6th session of the 10th Executive Committee of the CPV).

• 2. Proceedings of the 11th Party’s Congress.
• 3. Resolution No. 15-NQ/TW dated 01/06/2012, 5th session of the 11th

Executive Commitee of the CPV on social policies in the period 2012-2020.

• 4. Conclusion No. 23-KL/TW of the 5th session, 11th Executive

Committee of the CPV titled: “some issues on wage, social insurace, allowances for people with meritorious services and reform guidelines by 2020”.

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• I. GUIDELINES TO REVISE THE SI LAW
• ------> Key reform guidelines of the CPV on Social

insurance in those documents include:

• Broadening the coverage of SI: “striving towards the goal

that 50% of the labour force are covered by SI by 2020”.

• Developing a social security system that is diversified and

flexible…

• Separating the scheme for civil servants and the scheme for

workers in private sector, enterprises, and other sectors…

• Developing incentive policies for farmers, informal sector

workers to participate in voluntary social insurance…

• Complying with the principle of contribution and ensuring the

sustainability of the SI fund…

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• II. PROPOSALS TO REVISE THE SI LAW

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The result of review shows that more than 60 provisions on SI needs revision or supplementation

405 %&&*0& )' -0 ,0(%&0

• II. PROPOSALS TO REVISE THE SI LAW

6,'(%&%'+& '+ *+07/'570+) %+&*,3+#0 %+ )$0 38 8% -0 7'(01 )' )$0 38 '+ 7/'570+)

Adding supplementary old-age pension scheme in the Revised SI Law

Scope of application of the SI Law 1

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• II. PROPOSALS TO REVISE THE SI LAW

Broaden the coverage of sompulsory scheme (Article 2): Broaden the coverage of the compulsory SI scheme to all workers with employment contract of less than 3 months?

Vietnamese migrant workers working overseas in definite term.

Heads of household business?

Coverage of SI scheme 2

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• II. PROPOSALS TO REVISE THE SI LAW

Add another category of workers in the voluntary scheme (Article 2): broaden the coverage of voluntary SI scheme to vietnamese citizens of at least 15 years old, who are not covered by the compulsory scheme (does not provide a maximum age).

Coverage of SI scheme 2

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• II. PROPOSALS TO REVISE THE SI LAW

Amending article 23 of the SI Law on the benefit duration: Maximum benefit duration of the sickness benefit for diseases that requires long-term treatment is 12 months ---> in line with the revised Labour Code. Amending article 25 of the SI Law: where diseases that requires long term treatment and that the leave duration exceeds 180 days, the benefit rate shall not be lower than the general minimum wage --> in the direction that where the leave duration is less than 180 days, the benefit rate shall not be lower than the general minimum wage.

Sickness benefit 3

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• II. PROPOSALS TO REVISE THE SI LAW

Amending Article 28 of the SI Law:

• Amending provisions on marternity benefit in line with the

revised Labour Code (increasing the maternity leave to 6 months, and leave in case of adopting a child,...).

• Allowing male workers whose wife gives birth to take

parternity leave.

• Qualifying conditions: female workers who have contributed

for at least 3 months within 12 months prior to the month of giving birth are also entitled to maternity leave.

Maternity benefit 4

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• II. PROPOSALS TO REVISE THE SI LAW

Amending article 29 on leave for prenatal check-up: increasing the number of leaves for pathological pregnancies to 9 times (from the current cap

• f

times for both parthological and normal pregnancies). Amending article 31 on paid maternity leave when giving birth:

• increasing paid maternity leave to 6 months.
• Adding paid paternity leave for male workers (05 days or 7 days

depending on fund availability)

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Maternity benefit 4

• II. PROPOSALS TO REVISE THE SI LAW

Amending article 50 on retirement age: increasing the retirement age 6 months every year until the retirement ages of both men and women increase to 60 for women and 65 for men.

Old-age benefit 4

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• II. PROPOSALS TO REVISE THE SI LAW

Amending article 52 on accrual rate:

• Amending paragraph 1 that the monthly old-age pension

shall be 45% of the average reference salary for 20 years of contribution, any additional year of contribution shall be equal to additional 2% for male and 3% for female workers; the maximum rate is 75%.

• For early retirement, the pension rate will be deducted 2%

for every one year of early retirement (currently, it is 1%).

Old-age benefit 4

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• II. PROPOSALS TO REVISE THE SI LAW

Amending article 55 on conditions for old-age lump-sum: Old-age lump-sum shall not be given for workers who do not reach the retirement age, apart from exceptional cases like moving abroad to reside permanently, exceeding the working age. Amending article 56 on old-age lump-sum amount: for every contributing year, the lump-sum shall be:

• 1.5 times of the average insured salary for contributing years

prior to 2014;

• 2.0 times of the average insured salary for contributing years in
• r after 2014.

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Old-age benefit 4

• II. PROPOSALS TO REVISE THE SI LAW

Amending articles 58, 59, 60 on the reference salary to calculate

• ld age pension :

Option 1: For workers whose premium is paid according to salary scales

and tables provided by the Government:

• For new participants from 01/01/2015 onwards, the reference salary is

average salary of the whole contributing period, multiplied by CPI (similar to private sector workers).

• For old participants before 01/01/2015, the referene salary is the avarage
• f the insured salary of the past (5, 6, 8 or 10 years prior to retirement),

multiplied by CPI.

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Old-age benefit 4

• II. PROPOSALS TO REVISE THE SI LAW

Amending articles 58, 59, 60 on the reference salary to calculate

• ld age pension :

Option 2: separating the state administrative sector, and military

• sector. Workers in these sector do not make contribution. Their

pension are financed by the state budget. The Law shall define the benefit rate (applicable for civil servants, military officers who have contributed before the revised SI Law takes effect) . For workers in enterprises (including state owned enterprises) and non-state administrative agencies, their reference salary shall be avarage of working-life salary, multiplied by CPI.

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Old-age benefit 4

• II. PROPOSALS TO REVISE THE SI LAW

Amending article 66 on survival lump-sum:

A lump-sum shall be provided for survivors who are qualified for monthly allowance but can not enjoy monthly allowance for more than 24 months (to ensure fairness for those who are qualified for monthly allowance but can only enjoy monthly pension for a short period of time, eg. those who are just below the age of 15 or 18,...)

Survival benefit 5

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• II. PROPOSALS TO REVISE THE SI LAW

Amending article 67 on survival lump-sum amount: the lump-sum amount shall increase to catch up with the increase in contribution rate and in harmony with the proposed revision

• f the retirement lump-sum provided in article 56 (prior to

2014, 1.5 times of the monthly insured salary for each year of contribution; after 2014, 2.0 times of the monthly insured salary).

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Survival benefit 5

• II. PROPOSALS TO REVISE THE SI LAW

Supporting farmers and informal economy workers to participate in voluntary social insurance scheme:

• Beneficiaries of the support: new entrants to the voluntary scheme

excluding those who have contributed in compulsory scheme and continue by entering the voluntary scheme to meet the qualifying condition for monthly pension).

• Support amount: equivalent to employers’ contribution in the

compulsory scheme or 50% of the contribution rate. Survival and old-age benefit: same amendments as in the compulsory scheme.

Voluntary social insurance 6

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• II. PROPOSALS TO REVISE THE SI LAW

(1) Merging voluntary fund and the old-age and survival fund of the compulsory scheme (2) Deleting paragraph 4, article 90 on rewarding employers who do well in occupational safety and health

• ---->deleting para 2 article 133 on rewarding … this provision can not be

implemented. (3) Reducing the contribution rate to sickness, maternity and

• ccupational accidents and disease fund (Article 92):

“When the outstanding balance of the fund for sickness, marternity benefit or occupational accidents and diseases in a year is equal to or greater than that year’s total contribution, the respective contribution rate in the following year shall be reduced by 50%.”

SI fund 7

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• II. PROPOSALS TO REVISE THE SI LAW

(4) Insured salary (Article 94) “For a worker, whose salary is decided by the employer, the insured salary shall be the salary for that position or designation, plus any additional allowance and compensation” (in line with the article 90 of the revised Labour Code, 2012). (5) Administrative costs (Article 95) The administrative cost for managing the SI fund shall be decided as a certain percentage of the annual total contribution by employers and workers;

Social insurance fund 7

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• II. PROPOSALS TO REVISE THE SI LAW

According to current law, employers shall retain 2% of the contribution to the sickness and maternity fund to timely pay for qualified workers, and shall provide a statement at the VSS every quarter. However, in fact, many employers find it difficult to comply, especially those with big workforce, as they have to arrange a full-time staff, and the staff should be trained in social insurance. (Article 92, article 117). Revision proposal: employers shall not retain the 2%; but gather documents of the cases, and submit to VSS for payment; VSS shall pay the benefits to workers.

Procedures, implementation 8

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THANK YOU FOR YOUR ATTENTION!

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