Currently, most employees wish to claim their lump-sum social insurance payout for several reasons. However, when receiving lump-sum social insurance payout, employees in Vietnam will face many disadvantages.
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Vietnam: What are the disadvantages that employees shall face when receiving lump-sum social insurance payout? (Illustrative Image)
According to the provisions of Clause 1, Article 60 of the Social Insurance Law 2014 and guided by Resolution 93/2015/QH13, employees are entitled to a lump-sum social insurance payout if they fall into one of the following categories:
- Employees reaching the retirement age under the regulations without sufficient 20 years of social insurance premium payment or full or part-time female employees in communes, wards, or towns reaching 55 years of age upon retirement without 15 years of social insurance premium payment and do not participate in voluntary social insurance;
- Employees going abroad for settlement;
- Employees suffering from one of the life-threatening diseases such as cancer, polio, cirrhosis ascites, leprosy, severe tuberculosis, HIV infection progressing to AIDS, and other diseases as prescribed by the Ministry of Health;
- Police officers, soldiers demobilized, discharged without eligible conditions for retirement;
- Employees participating in compulsory social insurance after one year of resignation, participating voluntarily after one year of discontinuing contributions without sufficient 20 years of social insurance premium payment.
Thus, according to the above regulations, employees participating in compulsory social insurance who fall into one of the above cases will receive a lump-sum social insurance payout at request. However, receiving a lump-sum social insurance payout will result in the following disadvantages for employees:
Firstly, the lump-sum social insurance payout is much less than the paid premiums
According to the provisions of Article 5 of Decision 595/QD-BHXH, employees contribute 8% of their monthly salary to the retirement and survivorship fund each month; employers contribute 14% of the salary fund on which social insurance premiums are based to this fund monthly. employees must contribute a total of 22% of their monthly salary to the retirement and survivorship fund each month.
However, under Clause 2, Article 60 of the Social Insurance Law 2014, the lump-sum social insurance payout is calculated based on the number of years of social insurance premium payment:
- 1.5 months of the average monthly salary as the basis for social insurance premium payment before 2014;
- 2 months of the average monthly salary as the basis for social insurance premium payment from 2014 onwards.
Note: For periods of social insurance premium payment under one year, the lump-sum social insurance payout equals the contributed amount, with a maximum of 2 months of the average monthly salary.
Thus, the lump-sum social insurance payout received is significantly lower than the total social insurance premiums paid.
Secondly, employees cannot accumulate the period of social insurance premium payment
Specifically, Article 61 of the Social Insurance Law 2014 stipulates that if employees resign without qualifying for a retirement pension or have not received a lump-sum social insurance payout, their period of social insurance premium payment will be reserved.
In cases where employees have not received a lump-sum social insurance payout, their period of social insurance premium payment will be reserved and will be accumulated with their previous participation period if they continue to participate in social insurance. Conversely, if they have received a lump-sum social insurance payout, subsequent participation periods will be calculated anew, leading to incapacity for retirement pension eligibility when they reach retirement age.
Thirdly, employees must self-pay medical costs in old age
Under Article 2 of Decree 146/2018/ND-CP, persons whose health insurance premiums are paid by the social insurance agency include:
- Persons eligible to be entitled to retirement pensions and incapacity benefits
- Persons currently entitled to monthly social insurance benefits in connection with occupational accidents or diseases; rubber plantation workers currently entitled to monthly benefits in accordance with the Government’s regulations.
- Employees on sick leaves in connection with diseases defined in the List of diseases of which long-term treatments are required, issued by the Ministry of Health.
- Public officers of communes, wards or townlets who leave work and are currently entitled to monthly social insurance benefits.
- Employees on parental leaves who are entitled to childbirth and adoption benefits.
- Persons currently entitled to unemployment benefits.
Hence, employees receiving lump-sum social insurance payout will not qualify for retirement pension and consequently will not be eligible for health insurance coverage by the social insurance agency and will bear their own medical costs in old age. However, they can participate in family health insurance schemes.
Fourthly, employees shall be not eligible for funeral and survivorship allowances
According to Clause 1, Article 66 of the Social Insurance Law 2014, if pensioners, employees paying social insurance premiums, or employee preserving their period of social insurance premium payment for 12 months die, the funeral organizer will receive a lump-sum funeral allowance.
Simultaneously, Clause 1, Article 67 of the Social Insurance Law 2014 stipulates that if a pensioner or someone with 15 years of social insurance premium payment without yet receiving a lump-sum social insurance payout dies, his/her relatives will receive a monthly survivorship allowance.
Therefore, employees receiving lump-sum social insurance payout in Vietnam will not qualify for a retirement pension and will thus not be eligible for funeral and survivorship allowances.
Ty Na
