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Worrying trend of people leaving social security scheme: official

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An increasing number of Vietnamese people have opted to claim a lump-sum social security payment, withdrawing themselves from the national security system as authorities are striving for universal coverage.

Workers are sorting prawns at Minh Phú Seafood Corp in Hậu Giang Province. — VNA/VNS Photo

 

Statistics revealed that on an annual average, 700,000 people submitted claims for lump-sum payments, nearly as many as those enrolled in the Government-sponsored social security programme, according to Lê Đình Quảng, deputy head of the labour relations department, under the Việt Nam General Confederation of Labour (VGCL).

The cause could be the rising number of social security participants leaving work, with a large rate of them 35-40 years old. When these people no longer have a job, they would not want to pay the premiums anymore and choose to claim the entire payment, Quảng said.

Recent surveys by the labour confederation also mentioned the firing of employees above 30 years old, a trend that has worried policymakers and the social security agency.

“The National Salary Council went to survey regarding minimum wage at Minh Phú Seafood Corp in the southern province of Hậu Giang, which employs about 15,000 people. Over the past four years, only a few employees have retired at their retirement age while most left the company before the age of 35, and received unemployment benefits. This is what we’ve been told by the director-general of the company,” Quảng said.

This is not an isolated phenomenon as survey teams found similar stories at labour-intensive enterprises such as those in the textile and garment, footwear and seafood industries.

Labour authorities explained that in these labour-intensive working environments, workers in their 30s or older would no longer have the health to perform duties as well as when they were in their 20s, so they willingly resign.

Another important factor is that many enterprises try to persuade workers to leave the job and receive the lump-sum health and social security payment, as the longer the employees work for the company, the higher the social security payment the company has to make.

The workers who left these jobs would find themselves unable to find another job and would have to resort to working in the informal sector.

“The withdrawing from social security scheme would adversely and seriously affect the welfare system and benefits,” Quảng said

Social security officials have warned the public on multiple occasions of the heavy downside of taking the lump-sum payment.

The prospect of having a large amount of money in their hands is tempting, but it reduces total lifetime benefits.

At the current rate of 22 per cent of a social security participant’s monthly salary going into pension and survivor’s benefits fund, the total contribution would be equal to roughly 2.64 months’ salary. However, the lump-sum payment would be based on 2 months’ salary for each year participating in the social security scheme, minus interest rates.

 

Source: VNS

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