Investment from social insurance, health insurance and unemployment insurance funds in Vietnam

Investment from social insurance, health insurance and unemployment insurance funds in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Investment from social insurance, health insurance and unemployment insurance funds in Vietnam

Investment from social insurance, health insurance and unemployment insurance funds according to Article 4 of Decree 30/2016/ND-CP are as follows:

- Investment from social insurance, health insurance and unemployment insurance funds takes a form in the following order of priority:

= Purchase of government bonds;

= Provision of loans to the state budget;

= Making of deposits, or purchase of bonds, promissory notes, bills or deposit certificates at high performance commercial banks as rated by the State Bank of Vietnam;

= Provision of loans to Vietnam Development Bank and Vietnam Bank for Social Policies in the form of purchase of government-guaranteed bonds that are issued by these banks;

= Investment in important projects under the Prime Minister’s decisions.

- Investment in the two forms specified at Points d and dd, Clause 1 of Article 4 of Decree 30/2016/ND-CP shall be applied to the unemployment insurance fund only. The amount of investment in these two forms must not exceed 20% of the preceding year’s balance of the unemployment insurance fund.

- The Management Board of Vietnam Social Security shall, at the proposal of the Director General of Vietnam Social Security, decide on, and take responsibility before the Government for, forms and structure of investment from social insurance, health insurance and unemployment insurance funds.

2. Use of profits from investment activities of social insurance, health insurance and unemployment insurance funds in Vietnam

Use of profits from investment activities of social insurance, health insurance and unemployment insurance funds in Vietnam according to Article 12 of Decree 30/2016/ND-CP as follows:

All annual profits from investment activities under this Decree and the interest accrued on the deposit account, which reflect social insurance, health insurance and unemployment insurance revenues and expenditures under the law on financial management mechanism for social insurance, health insurance and unemployment insurance shall be used as follows:

- Setting up of the risk provision fund for investment from the social insurance, health insurance and unemployment insurance funds on the following principles:

= The annual level of setting up the risk provision fund must not exceed 2% of the profit from investment activities until the balance of this fund equals 5% of the preceding year’s loan outstanding balance for investment in the forms specified at Points c and dd, Clause 1, Article 4 of Decree 30/2016/ND-CP. The specific annual setting-up level shall be decided by the Director General of Vietnam Social Security;

= The risk provision fund used to offset the investment amount at risk shall be handled under Article 13 of Decree 30/2016/ND-CP;

= Unused risk provision fund shall be used for investment in the forms prescribed at Points a and b, Clause 1, Article 4 of Decree 30/2016/ND-CP.

- The remainder shall be allocated to other funds according to the ratio of the average balance of each fund to the total average balance of the funds in the year, and used as follows:

= For the profit allocated to the social insurance fund, after deducting the cost for social insurance management in accordance with law, the rest shall be added to the component funds according to the ratio of the average balance of each component fund to the total average balance of the component funds in the year;

= The profit allocated to the health insurance fund shall be added to the provision fund for general regulation;

= The profit allocated to the unemployment insurance fund shall be added to this fund.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE