Principles of investment from social insurance, health insurance and unemployment insurance funds in Vietnam

Principles of 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. Principles of investment from social insurance, health insurance and unemployment insurance funds in Vietnam

Principles of investment from social insurance, health insurance and unemployment insurance funds according to Article 3 of Decree 30/2016/ND-CP, investment from social insurance, health insurance and unemployment insurance funds must ensure transparency, safety, efficiency and capital recoverability.

2. Forms of investment from social insurance, health insurance and unemployment insurance funds in Vietnam

Investment forms 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.

3. Formulation of investment plan from social insurance, health insurance and unemployment insurance funds in Vietnam

Article 5 of Decree 30/2016/ND-CP stipulates on formulation of investment plan from social insurance, health insurance and unemployment insurance funds as follows:

- Based on annual revenues and expenditures of social insurance, health insurance and unemployment insurance funds and the forms specified in Article 4 of Decree 30/2016/ND-CP, Vietnam Social Security shall formulate an investment plan and submit it to the Management Board of Vietnam Social Security for approval.

- The plan on investment from social insurance, health insurance and unemployment insurance funds shall be formulated together with the revenue and expenditure estimation and included in the annual revenue and expenditure estimation of Vietnam Social Security.

Such plan must have the following contents:

+ Evaluation of the previous year’s investment situation and expected result of the current year’s investment, detailed per investment form and covering such criteria as investment loan outstanding balance, investment amount, repaid loan amount (principal and interest), and investment interest rate;

+ Proposals for investment in a plan year, including total amount used for investment, investment forms and structure, investment duration, investment interest rate, repaid loan amount (principal and interest), and year-end investment loan outstanding balance.

- Vietnam Social Security shall make investment strictly according to investment forms, structure and methods specified in this Decree and the investment plan approved by the Management Board of Vietnam Social Security.

In the course of implementation, if deeming it necessary to adjust or supplement the investment plan for raising the investment efficiency, Vietnam Social Security shall report such adjustment or supplementation to the Management Board of Vietnam Social Security for consideration and decision.

Le Truong Quoc Dat

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