How to pay social insurance to ensure a living pension?

The draft revised Law on Social Insurance proposes to supplement the salary used as the basis for compulsory social insurance payment to be at least half of the highest regional minimum monthly salary; at most 8 times the highest regional minimum monthly salary announced by the Government.

This is the basis for determining the basis for social insurance contributions for those who do not receive a salary (business owners; business managers, cooperative managers who do not receive a salary...). This is also the basis for determining the responsibility to participate for part-time employees.

Regarding the salary used as the basis for compulsory social insurance contributions for the non-state sector, it basically inherits the current regulations, but the regulations are more detailed. Specifically, the salary used as the basis for social insurance contributions includes the salary, salary allowances, and other supplements, paid regularly and stably in each salary payment period.

On that basis, the Government provides detailed regulations to specifically determine the amounts that must and must not be paid for compulsory social insurance. Determining monthly salary as the basis for paying social insurance in cases where there is an agreement to pay wages by the hour, day, week, product or contract.

Paying social insurance at 70 - 80% of income is appropriate.

Regarding the issue of salary as the basis for social insurance contributions, the former Deputy Minister of Labor, Invalids and Social Affairs said that the monthly income structure of employees is somewhat fixed and fluctuating. Therefore, if contributions are based on total income, each month, the income level is different, making it difficult to have a basis for resolving the regime.

Therefore, according to Mr. Huan, it is appropriate to base the salary on which social insurance contributions are based on a stable contribution portion consisting of salary and some monthly stable allowances. In reality, the current contribution level is 70-80% of the monthly income of employees and there has been no change.

According to Mr. Huan, the percentage of social insurance contributions of employees and employers must remain at the current level of 25%. Only then can we ensure that the pensions of employees are improved.

The level of contribution is very important.

A labor expert said that the social insurance contribution level is very important for workers. If the social insurance participation period is short and the contribution level is low, the worker's pension will be very low, especially when the social insurance contribution period is reduced to 15 years to receive pension.

According to this expert, technically, the social insurance payment period can be reduced to 15 years or 10 years to receive a pension, but when the social insurance payment level in our country is not high, the pension level is very low, and workers will not have enough to live on when they retire.

"Social insurance is still a lifelong accumulation and the 15-year level of social insurance participation to receive pension is only for late participation cases. In essence, if you want a high pension and ensure your life when you retire, the social insurance contribution must be high and the participation period must be long enough," said the labor expert.

The compulsory social insurance contribution level is calculated based on the employee's monthly salary. This includes the contribution level to the pension and death fund; the sickness and maternity fund; and the occupational accident and disease fund.

Compulsory social insurance contribution levels in 2023 to pension funds, sickness and maternity funds, occupational accident and disease funds, unemployment insurance, and health insurance for employees.

Accordingly, based on the employee's salary, the compulsory social insurance contribution rate is 32%. Of which, the employee contributes 10.5% of the salary, the employer contributes 21.5% of the monthly salary fund for social insurance contribution.

For voluntary social insurance, the monthly contribution rate is 22% x (income level chosen to pay voluntary social insurance - level supported by the state). Thus, employees participating in voluntary social insurance must pay a rate of 22% of the income level that they choose to pay voluntary social insurance.

In addition, to encourage freelance workers to participate in social insurance, the state also partially supports the contribution level for those who voluntarily participate in social insurance.