What is voluntary social insurance? What are the benefits of voluntary social insurance? Voluntary social insurance benefits? How and benefits when participating in voluntary social insurance?
Currently, there are many different types of insurance such as health insurance, unemployment insurance, life insurance … one of the types of insurance that receives a lot of attention from people is voluntary social insurance.
Law on Social Insurance No. 58/2014/QH13 promulgated on November 20, 2014
1. What is voluntary social insurance?
Voluntary social insurance is a type of social insurance organized by the State in which the insured has the right to choose the payment rate and payment method suitable to his/her finances.
Pursuant to Clause 4, Article 2 of the Law on Social Insurance No. 58/2014/QH13 promulgated on November 20, 2014, Vietnamese citizens aged full 15 years and older are not included in the group of subjects participating in compulsory social insurance. are required to participate in voluntary social insurance. And when it is necessary to participate in voluntary social insurance, the employee must base on the above regulations to see which group he or she belongs to to be able to pay social insurance premiums.
2. What regimes does voluntary social insurance include?
Pursuant to Article 4, Law on Social Insurance of Vietnam 2014 stipulates that voluntary social insurance is entitled to 02 regimes: retirement and survivorship. Compulsory social insurance for employees will enjoy benefits including: sickness, maternity, labor accident, occupational disease, retirement, and death.
It can be seen that, compared with the compulsory social insurance system, the participants of voluntary social insurance enjoy fewer benefits (no sickness, maternity, occupational disease, and occupational accident regimes). However, with the great benefits that this type of insurance brings, everyone should still participate in voluntary social insurance, if not subject to compulsory social insurance.
Voluntary social insurance premium
Pursuant to Article 87, Law on Social Insurance of Vietnam 2014 detailing the rate of voluntary social insurance premium payment for employees as follows: Employees specified in Clause 4, Article 2 of this Law, monthly payment equal to 22% of the rate monthly income selected by the employee to contribute to the retirement and survivorship fund; The minimum monthly income used as a basis for paying social insurance premiums is equal to the poverty line of rural areas and the highest is 20 times the basic salary.
Employees pay voluntary social insurance premiums as prescribed by law and can choose one of the following payment methods:
see more: Participants, payment rates and benefits of voluntary social insurance
– every 3 months;
– every 6 months;
– every 12 months;
– Once for many years to come with a lower monthly payment or once for the missing years with a higher monthly payment than the one prescribed in this Article.
3. Voluntary social insurance benefits:
Pursuant to Chapter IV, the Law on Social Insurance of Vietnam 2014 details the level of voluntary social insurance benefits, specifically as follows:
The monthly pension is equal to 45% of the average monthly income on which social insurance premiums are based and corresponds to the number of years of payment of social insurance, in which:
see more: Payment rates and benefits when participating in voluntary social insurance contributions
Male workers retire in 2018 for 16 years, 17 years in 2019, 18 years in 2020, 19 years in 2021 and 20 years from 2022 onwards.
Female employees who retire from 2018 onwards is 15 years.
After that, an additional 2% is charged every year, up to a maximum of 75%.
Each year of payment is higher than the number of years corresponding to the 75% pension rate, which is calculated as 0.5 months of the average monthly income on which social insurance premiums are based.
One-time social insurance: The rate of one-time social insurance enjoyment is calculated according to the number of years of paying social insurance premiums, each year is calculated as follows:
– 1.5 months the average monthly income on which social insurance premiums are based for the years of payment before 2014;
– 02 months of average monthly income on which social insurance premiums are based for the years of payment from 2014 onwards;
see more: Retirement regime for subjects paying voluntary social insurance
– In case the period of social insurance payment is less than 1 year, the social insurance allowance shall be equal to the paid amount, and the maximum level is equal to 02 months of the average monthly income on which social insurance premiums are based.
The level of enjoying the death benefit
* Funeral allowance
Equal to 10 times the base salary (current allowance is 14.9 million dong), for people who have paid for full 60 months or more or are enjoying a pension.
* Survivorship allowance
For relatives of the person who is paying or has reserved the payment period, every year:
1.5 months the average monthly income on which social insurance premiums are based (paid before 2014);
02 months the average monthly income on which social insurance premiums are based (from 2014 onwards);
see more: Can I get a pension if I pay voluntary social insurance?
Maximum of 02 months the average monthly income on which social insurance premiums are based, if the payment is less than 1 year;
At least 03 months the average salary and monthly income on which social insurance premiums are based if participating in both compulsory and voluntary social insurance.
For family members of pensioners:
48 months of pension being enjoyed if he dies in the first 02 months of receiving pension;
For every additional 01 month of pension, the allowance will be reduced by 0.5 months if you die in the following months.
4. Methods and benefits when participating in voluntary social insurance:
According to Point b, Clause 1, Article 99 of the Law on Social Insurance 2014, when registering to participate in voluntary social insurance for the first time, employees submit a declaration of participation in social insurance to the social insurance agency of their residence.
Within 07 days from the day on which the complete application is received, the social insurance agency will issue the insurance book to the employee.
It can be seen that, with simple procedures, the State is creating the best conditions for all employees to participate in social insurance.
see more: Where to buy voluntary social insurance? Fees and benefits?
Benefits of joining voluntary social insurance
Voluntary social insurance policies are expanded to help free workers to participate so that when they reach the end of working age, they can enjoy the same benefits as pensioners. When participating in voluntary social insurance, people enjoy five main benefits.
Firstly, when participating in voluntary social insurance, if a man is full 60 years old, a woman is full 55 years old and has paid social insurance contributions for full 20 years or more, he/she will be entitled to a monthly pension.
Second, these people will be provided with free health insurance while on pension.
Thirdly, if a person who is enjoying pension or participating in voluntary social insurance for full five years or more dies, his/her relatives are entitled to a lump-sum funeral fee and survivorship allowance.
Fourth, the pension is adjusted on the basis of the increase in the consumer price index and economic growth in line with the social insurance fund.
Fifth, participants of voluntary social insurance are also supported by the State with payment when participating in voluntary social insurance with a maximum support period of 10 years.
Voluntary social insurance premium
see more: Powers, functions and duties of Vietnam social insurance
Also according to Decision 595, specifically in Clause 1, Article 10, when participating in voluntary social insurance, employees must pay the following rates:
Monthly payment = 22% x Selected income
The lowest monthly income selected by participants of voluntary social insurance is equal to the poverty line of rural areas (VND 700,000/person/month) and the highest is 20 times the base salary.
Ms. A registers to participate in voluntary social insurance with a monthly income of 4,000,000 VND/month. Her voluntary social insurance premium in April 2020 will be 22% x 4,000,000 VND = 880,000 VND.
Participants can also choose to pay by monthly payment method; every 3 months; Every 6 months or every 12 months.
see more: How to calculate the correct average monthly salary for social insurance contributions?
Especially, according to Clause 1, Article 12 of this Decision, participants of voluntary social insurance are also supported by the State with the payment rate. Specifically:
Participants in voluntary social insurance are supported by the State with a percentage (%) of the monthly social insurance payment according to the poverty line of rural areas:
– 30% for voluntary social insurance participants from poor households;
– 25% for voluntary social insurance participants from near-poor households;
– 10% for other subjects.
The monthly support level is calculated by the formula:
Support level = kx 22% x poverty line in rural areas
k is the percentage of State support:
– k = 30% for participants from poor households;
– k = 25% for participants from near-poor households;
– k = 10% with other subjects.
Ms. B belongs to a near-poor household participating in voluntary social insurance from June 2019 with a selected monthly income of 800,000 VND/month, monthly payment method.
The applied poverty line in rural areas is 700,000 VND/month. The amount of Ms. B’s voluntary social insurance payment will be: 22% x 800,000 VND/month – 25% x 22% x 700,000 VND/month = 137,500 VND/month.
5. Should you pay voluntary social insurance?
With a lot of content, regulations and analysis as mentioned above, the most important issue that people are interested in is whether to pay voluntary insurance or not?
While different types of insurance are flourishing, many opinions have compared the benefits between participating in social insurance (social insurance) to enjoy pensions with participating in life insurance and saving. The direct comparison of products not only violates the Competition Law, but also shows inadequate awareness of policies and the role of social insurance in ensuring social security.
The calculation that participating in social insurance to enjoy pension brings benefits in retirement lower than benefits when saving savings or participating in life insurance for 20 years is completely wrong. Because, there is a huge difference between social insurance and saving or buying life insurance.
The biggest difference is in the purpose, social insurance is a type of non-profit insurance. Accordingly, the social insurance fund is protected by the State, which means it is not bankrupt. Meanwhile, banks and commercial insurance companies do business with the aim of making a profit and may go bankrupt. In the event of a bank, commercial insurance company bankruptcy, savings deposits may be lost.
Another difference, when saving, participants are entitled to a certain amount of interest (according to the deposit term), the value of the interest will be lower and lower due to the impact of price slippage (inflation). and after 20-30 years, the value of the remaining principal amount is very little. This is the opposite of social insurance, when the payment of social insurance premiums is returned by increasing the consumer price index (CPI) year over year according to the Government’s regulations and becomes the basis for calculating the pension. During the period of participation in social insurance, if the participant of social insurance dies, the period of payment of social insurance premiums shall be recorded to calculate the entitlement to the survivorship regime.
The pension level of social insurance participants is periodically adjusted according to economic growth and CPI. In fact, almost every year, the State adjusts to increase pensions. From 2003 to now, the Government has adjusted the pension many times with an increase of 7.5 – 9.3 times (depending on the target group) compared to the pension level at the time of 2002.
In addition, during the entire period of pension enjoyment, employees are paid by the social insurance fund to issue health insurance cards (HI) and enjoy equal medical examination and treatment benefits regardless of the premium. participation, type of illness, etc. When the person receiving social insurance dies, the person taking care of the funeral is also entitled to a funeral allowance equal to 10 months’ basic salary at the time of death of the social insurance beneficiary, and their relatives are entitled to the survivorship allowance (subsistence allowance). monthly or once). Those are the outstanding advantages of social insurance.
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