Rights and responsibilities of beneficiaries of the retirement program in Vietnam

Rights and responsibilities of beneficiaries of the retirement program in Vietnam (Internet image)

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

1. What is retirement program?

According to Clause 2, Article 3 of Decree 88/2016/ND-CP, retirement program is the abbreviated name of the voluntary supplemental retirement program which is a social insurance policy with voluntary features for the purpose of increasing retirement savings of fund participants under individual retirement accounts used to make investments and accumulation in accordance with the law.

2. Entities making contributions to retirement program in Vietnam

Specifically, in Article 6 of Decree 88/2016/ND-CP, the entities making contributions to retirement program include:

- Employers who make contributions for their employees in accordance with regulations of the Labor Code 2019.

- Employees as regulated in the Labor Code 2019.

- Individuals aged 15 years or older, working without labour contracts as referred to in the Labor Code 2019.

3. Rights and responsibilities of beneficiaries of the retirement program in Vietnam

3.1. Rights and responsibilities of the employer

Employers participating in voluntary supplementary retirement plans have the following rights and obligations:

- An employer participating in the retirement program shall have the following rights:

+ Contributions made by the employer to the retirement fund for his/her employees shall be accounted into deductible expenditures upon determination of income subject to corporate income tax in accordance with regulations of the law on taxation;

+ Make decisions on the rate and time of contribution, increase, decrease, termination or suspension of contributions as regulated in the written agreement signed by the employer and the employee on the participation in the retirement program and the signed retirement fund participation contract;

+ Select and change retirement fund management company as regulated in the written agreement signed by the employer and the employee on the participation in the retirement program;

+ Get back contributions made for an employee and earnings from investment by such contributions after relevant expenses are deducted in the event that the employee fails to meet requirements stated in the written agreement signed by the employer and the employee on the participation in the retirement program as referred to in Article 26 of Decree 88/2016/ND-CP.

- An employer participating in the retirement program has the following responsibilities:

+ Make contributions to the retirement fund according to the contribution percentage belonging to the employer’s responsibility as specified in the written agreement signed by the employer and the employee on the participation in the retirement program and the signed retirement fund participation contract;

+ Make contributions to the retirement fund as entrusted with by the employee according to the contribution percentage belonging to the employee’s responsibility within the period specified in the written agreement signed by the employer and the employee on the participation in the retirement program and the signed retirement fund participation contract (if any);

+ Ensure the separation between the employer’s contributions and those entrusted with by the employee (if any);

+ Comply with procedures for change of the retirement fund management company in conformity with provisions in the written agreement signed by the employer and the employee on the participation in the retirement program;

+ Discharge duties mentioned in the written agreement signed by and between the employer and the employee on the participation in the retirement program, the retirement fund’s charter and the retirement fund participation contract as referred to in this Decree.

(Article 10 of Decree 88/2016/ND-CP)

3.2. Rights and responsibilities of the employee in Vietnam

Specifically, Article 11 of Decree 88/2016/ND-CP stipulates the rights and responsibilities of employees participating in the retirement program as follows:

- An employee participating in the retirement program shall have the following rights:

+ Participate in the retirement program and have rights and interests accrued from that retirement program as referred to in Decree 88/2016/ND-CP;

+ Contributions made to the retirement fund shall be deducted from taxable income before calculation of personal income tax according to the rate regulated in the law on personal income tax;

+ Make decisions on the rate and time of contribution, increase, decrease, termination or suspension of contributions as regulated in the retirement fund participation contract;

+ The employee who participates in the retirement program through his/her employer may select and change between retirement programs managed by the same retirement fund management company; the employee who directly participates in the retirement program is entitled to select and change the retirement fund management company;

+ Have an individual retirement account issued, and have the right to access to the information about to his/her individual retirement account; move his/her individual retirement account to another retirement fund management company in case of change of the retirement fund management company;

+ Receive payments from the individual retirement account as referred to in Decree 88/2016/ND-CP;

+ Personal retirement information and the information related to the individual retirement account will be kept secret;

+ Have the right to change from the form of participation in the retirement fund through the employer into the form of direct participation in the retirement fund;

+ In case of change of employment:

++ Maintain the individual retirement account opened at the retirement fund management company at the former employer’s place under the form of direct participation in the retirement program; or

++ Move the individual retirement account to the retirement fund management company at the new employer’s place.

- An employee participating in the retirement program has the following responsibilities:

+ Fulfill obligations as regulated in the retirement fund’s charter and the retirement fund participation contract;

+ Comply with regulations in Decree 88/2016/ND-CP and relevant laws.

3.3. Rights and responsibilities of individuals participating in the retirement program in Vietnam

Rights and responsibilities of individuals participating in the retirement program are specified in Article 12 of Decree 88/2016/ND-CP, specifically as follows:

- An individual participating in the retirement program shall have the following rights:

+ Have the rights as those of an employee participating in the retirement program regulated in Points a, c, d, dd, e and g Clause 1 Article 11 of Decree 88/2016/ND-CP;

+ Contributions made to the retirement fund shall be deducted from taxable income before calculation of personal income tax according to the rate regulated in the law on personal income tax if that individual has participated in compulsory social insurance or voluntary social insurance (including the cases where the period of social insurance premium payment is reserved) in accordance with regulations of the law on social insurance;

+ Have the right to change from the form of direct participation in the retirement fund into the form of participation in the retirement fund through the employer.

- Individuals participating in retirement programs shall have the same responsibilities with employees participating in retirement programs as prescribed in Clause 2 Article 11 of Decree 88/2016/ND-CP.

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