Updated  
March, 24 2012 09:42:22

Increasing claims require social security fund rethink

 

Ha Noi Social Security staff process health insurance claims. — VNA/VNS Photo Duong Ngoc
The insurance sector paid VND38.5 trillion ($185.3 million) to 1.1 million pensioners and other beneficiaries last year, Viet Nam Social Security (VSS) deputy director general Do Thi Xuan Phuong told Thoi bao Kinh te (Economic Times).

What are Viet Nam Social Security's priorities for national socio-economic development?

In recent years, the social security funds have been under good management and the money has been used for the right purposes. As a result, the funds increased year by year in line with government regulations. Yet, in my opinion, there are three major issues requiring more effort. They are the increase in the number of people participating in social, health and unemployment insurances; a need to ensure the balance of the social security fund; improvement of staff performances in the interests of the scheme participants.

Do you think participants in the VSS will increase through compulsory or voluntary schemes?

In the past few years, participation in the VSS has been compulsory for employees from all types of enterprises with labour contracts of three months or longer, yet the number of contributors remains very small – only 20 per cent. I'm sorry to say that the compliance level of small and medium enterprises is the weakest.

In addition, the number of voluntary participants is also very low. Five years after the launch of the voluntary scheme, we had little more than 100,000 participants by 2011.

Among the groups with the least contributors is the farmers' group.

From this, we see the need to raise people's awareness of their legal requirements on social and health insurance to attract a greater participation while adopting stronger penalties for those who violate the law on social insurance.

At VSS, we have resolved to improving our management thinking and reforming our administration to provide better services to participants.

We'll try to apply advanced information technology in management from central down to grassroots levels. We hope that with the help of IT the performance of our staff will be more effective.

One of the worries of the VSS is the likely imbalances of the health insurance and the social funds in the future. How does the VSS plan to keep them in balance?

According to a recent survey conducted by the VSS, if the same pace of the annual increase in the number of people paying social insurance – particularly people at retirement age (60 for men and 55 for women) – the collection and payments for pensioners and other associated beneficiaries under the existing Law on Social Insurance will be in balance by 2020. Yet from 2023 it will be a problem.

Under the current insurance law, the aggregated sum contributed to the social insurance fund of an employee throughout his working years can only pay for 7-8 years of his/her pension benefit. In fact, on average, a Vietnamese pensioner enjoys a benefit for 16-23 years. Their pension is equal to 75 per cent of the salary they received before retirement. That percentage is much higher than in other countries where about 50 per cent applies.

According to the international Organisation of Economic Co-operation and Development, if Viet Nam wants to maintain the present high pension payment, contributions by the employees will have to increase to over 45 per cent of their monthly salary.

I have to concede that from 2005-2009 the health insurance fund was in constant imbalance. 2010 was the first year the fund was in balance and had some for reserve. This is a big concern for the VSS.

Furthermore, as from next month when hospital fees rise, what will happen then?

In such a situation, the social insurance sector will have to come up with a solution to make the social insurance and health insurance funds achieve sustainable balances because they are the main pillars of social security in Viet Nam. – VNS

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