Guidance on handling pensions for employees in organizations that have not paid full social insurance in Vietnam

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1. Guidance on handling pensions for employees in organizations that have not paid full social insurance in Vietnam

On June 21, 2023, Vietnam Social Insurance (VSI) issued Official Dispatch 1880/BHXH-CSXH guiding the implementation of social insurance policies for employees in organizations that have not fully paid social insurance contributions. In which, it is described the resolution for lump-sum social insurance for pension as follows:

According to Clause 3, Section 3 Official Dispatch 1880/BHXH-CSXH, lump-sum social insurance for pension shall be resolved as follows:

- For beneficiaries as prescribed at points b, c, d, Clause 1, Article 60 of the Law on Social Insurance 2014:

- lump-sum social insurance benefits are resolved for the period of actual social insurance payments. In case afterward, the unpaid social insurance amount is compensated by the organization or other financial sources, the lump-sum social insurance benefits will be supplemented according to the guidance at Point 2.2.d of the Official Dispatch 1880/BHXH-CSXH.

- For beneficiaries as prescribed at point a, Clause 1, Article 60 of the Law on Social Insurance 2014 who have not completed 20 years of social insurance contributions (including unpaid social insurance periods), the resolution is similar to the case at  Point 2.2.a of the Official Dispatch 1880/BHXH-CSXH.

- For beneficiaries under Resolution 93/2015/QH13 who have not completed 20 years of social insurance contributions (including unpaid social insurance periods), the resolution is similar to the case at Point 2.2.a Official Dispatch 1880/BHXH-CSXH.

The determination of an employee's one-year work cessation to consider eligibility for lump-sum social insurance according to Clause 1, Article 1 of Resolution 93/2015/QH13 is based on the last time of work cessation before the employee requests lump-sum social insurance benefits.

- When the unpaid social insurance amount is compensated by the unit or other financial sources, the social insurance agency records and conserves the entire supplementary payment period. If the employee continues to participate in social insurance, the aforementioned supplementary payment period is added to the subsequent participation period to calculate social insurance policies.

- If the unpaid social insurance amount is compensated by the unit or other financial sources and the employee requests lump-sum social insurance for the supplementary payment period, the social insurance agency consolidates the previously resolved period with the supplementary payment period to determine the new benefit amount according to the Law on Social Insurance 2014 at the time of subsequent resolution, and subtracts the re-calculated benefit amount corresponding to the previously calculated social insurance one-time benefit period, including rounded-off periods (if any), to pay the additional amount to the employee.

- To ensure the long-term social insurance benefits for employees, lump-sum social insurance benefits for cases with a social insurance payment period of 20 years or more (including unpaid social insurance periods) are not resolved, except for cases as prescribed at points b, c of Clause 1, Article 60 of the Law on Social Insurance 2014.

Thus, the Vietnam Social Insurance agency will base on the number of years of social insurance contributions of the employee to resolve lump-sum social insurance for pension on a case-by-case basis.

2. Regulations on the timing of pension commencement in Vietnam

According to Article 5 of Circular 01/2016/TT-BLDTBXH on the timing of pension commencement:

- The timing of pension commencement as prescribed in Article 76 of the Law on Social Insurance 2014 and Clause 1, Article 6 of Decree 134/2015/ND-CP is implemented as follows:

+ The timing of pension commencement is the 1st day of the following month after the birth month of the year in which the social insurance participant meets the conditions for pension entitlement as prescribed at points a and b, Clause 2, Article 5 of Decree 134/2015/ND-CP.

In case the birth month is December, the timing of pension commencement is the 1st of January of the following year in which the social insurance participant meets the conditions for pension entitlement.

+ In case the birth date and month of the social insurance participant cannot be determined (only the birth year is available), the timing of pension commencement is the 1st of January of the following year in which the social insurance participant meets the conditions for pension entitlement as prescribed at points a and b, Clause 2, Article 5 of Decree 134/2015/ND-CP.

+ In case the social insurance participant meets the conditions for pension entitlement as prescribed in Clause 2, Article 5 of Decree 134/2015/ND-CP but continues to participate in voluntary social insurance, the timing of pension commencement is the 1st day of the following month after stopping voluntary social insurance contributions and requesting pension benefits.

- In case a participant in voluntary social insurance pays a lump sum for the remaining years according to Clause 2, Article 8 of Circular 01/2016/TT-BLDTBXH to qualify for pension, the timing of pension commencement is calculated from the 1st day of the following month after the lump-sum payment for the remaining years is completed.

Best regards!

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