New Points On Social Insurance Law 2014 – Update on Article 60 On Lump-sum Social Insurance
The new Social Insurance Law 2014 (effective from 01st January 2016) consists many new points relating to the rights and benefits of employees.
One of the latest activities relating to the issuing of instruction document of this Law is about Article 60 on lump-sum SI. According to an internal opinion poll on 15th June 2015, more than 87% of the National Assembly supported a resolution to modify the 2014 SI Law to give workers the option of a lump-sum social insurance payment one year after their employment ends, instead of the original law stating funds would be withheld until retirement. Comparison between the new and the current Law on the lump-sum SI is as follows:
Article 60, SI Law 2014:
- – A lump-sum can be paid to the employee if he/she reaches the retirement age but is not qualified to receive benefit (having paid SI premiums for less than 20 years)
- – The level of a lump-sum SI is computed based on the number of contribution years to SI fund, for each year, the level is computed as follows:
- + 1,5 months at the average wage on which SI premiums are based for years of paying SI premiums prior to 2014
- + 2 months at the average wage on which SI premiums are based for years of paying SI premiums from 2014 onward
- + The level of SI benefit shall be equivalent to the amount of SI premiums paid if the duration of SI premium payment is less than 1 year, the maximum rate is equivalent to 2 months at of the average wage on which SI premiums are based
Article 55, SI Law 2006 (current SI Law):
- – A lump-sum can be paid to employees who discontinue paying social insurance premiums after one-year leave and request lump-sum social insurance benefit while having paid social insurance premiums for less than twenty years
- – The level of a lump-sum SI is equivalent to 0.75 times of average monthly wage on which SI premiums are based if the employee had paid from fully 3 to 6 months; equivalent to 1.5 times of average monthly wage on which SI premiums are based if the employee had paid from over 6 months to fully 1 year
At the moment, we still have to wait for official decrees from the Lawmakers for practical implementation of this regulation. This issue will also be discussed in the Seminar “Dialogue with General Director of Department of SI: Changes and updates in the Law of SI 2014”.
Below are the other new points of SI Law 2014. The SI Law 2014 consists of 9 chapters and 125 articles, more concise than the present one which includes 11 chapters and 141 articles).
- Two groups were added in the Subjects to compulsory SI
- – Persons working under labor contracts of definite term of full 01 to fewer than 03 months (current law: only contracts of definite term of more than 3 months)
- – Non-specialized officers at communal level
- – Foreign employees working in Vietnam with work permit or professional certificate or license issued by competent authorities of Vietnam (current law: foreign employees were compulsorily to participate in HI only)
- Sickness benefits
- – In the case that the employee must continue his/her medical treatment after 180 days, he/she continues to be entitled to sickness benefit at a lower rate and a duration equal to the duration of SI premium payment (the current law doesn’t limit the duration of sickness benefit)
- – The level of sickness benefit per day is calculated based on monthly sickness allowance divided by 24 days (instead of 26 days in the current law)
- – The level of health saving and rehabilitation after sickness leave for one day is equivalent to 30% of the common minimum wage (at the moment, the rate is 25% and 40%)
- Maternity benefit
- – For employee who adopt an infant under 6 months of age (instead of 4 months of age in current law)
- – Added 2 more qualifying conditions: female employee who gives birth as a surrogate mother and the intended mother
- – Insured male employee whose wife gives birth is entitled to maternity leave benefit as follows: 5 working days; 7 working days had an operation at birth delivery or gave birth to premature infant of under 32 weeks; 10 days if the wife gives birth to twins; from triplets upwards, the period of leave is added 3 days for each child; 14 working days if the wife gives birth to twins through an operation
- – Female employee who gives birth to her child and has taken maternity leave prescribed by an authorized medical station shall be entitled to maternity benefit if she has paid SI premiums for at least 3 months during 12 months prior giving birth
- – In case, only father is insured person, the father is entitled to a lump-sum allowance equivalent to 2 months of the common minimum wage at the month of giving birth for each child
- – The level of maternity benefit for 1 day stipulated is computed as the level of monthly maternity benefit divided by 24 days
- – The level of maternity leave benefit for 1 day is equivalent to 30% of the common minimum wage
- Old age benefit
- – Gradually increasing the age in qualifying conditions for an old age benefit when decreasing working capacity: from 1st January 2016, employee who has reached the age of 51 for a man and 46 for a woman and has lost at least 61% of working capacity shall be entitled to old age pension when decreasing working capacity. After that, by 2020 onward, employee who reaches the age of 55 for a man and 50 for a woman shall be entitled to old age benefit if having lost at least 61% of working capacity (current law: the age of 50 for a man and 45 for a woman)
- – Having reached the age of 50 for a man and 45 for a woman and having lost at least 81% of working capacity
- – Level of the monthly old age benefit:
Effective year The level of monthly old age benefit is 45% equivalent to Increased rate for additional year of paying SI premiums For now 15 years Man: +2%
01/01/2018 Man: 16 years
Woman: 15 years
+2% 01/01/2019 Man: 17 years
Woman: 15 years
+2% 01/01/2020 Man: 18 years
Woman: 15 years
+2% 01/01/2021 Man: 19 years
Woman: 15 years
+2% 01/01/2022 Man: 20 years
Woman: 15 years
- – Deduction of early retirement:
- 2% shall be reduced for every year of early retirement.
- For the retirement age which has a fraction of less than fully 6 months, 1% shall be reduced, and dor the retirement age which has a fraction of over 6 months, the level of monthly old age benefit shall not be reduced for every year of early retirement.
|Participating in the Seminar “Dialogue with General Director of Department of SI: Changes and updates in the Law of Social Insurance 2014” to have direct dialogue with Mdm Thuy Nga – General Director, Department of SI on changes and updates in the SI Law 2014 and better understanding about new points for better implementation at business level.
Get the best entrance fee by registration and completing payment by 21st June 2015.
Source: HR Compliance & Legislation Team of NVM Group