Provisions and precautions for the lump-sum social insurance benefit system for foreign workers
2023/05/19
- Nguyen Thi My Ngoc
Introduction
The social insurance lump-sum payment is a system that pays a fixed amount to workers who are currently paying social insurance premiums but have no intention of continuing to be enrolled in social insurance or who do not meet the conditions for receiving a retirement pension. This system also applies to foreign workers.
This article will help foreign workers and Vietnamese employers understand their rights regarding social insurance lump-sum benefits by explaining the eligibility requirements, benefit amounts, application documents, procedures and important points to note under the social insurance lump-sum benefit system.
1. Conditions for receiving social insurance lump sum payments
Foreign workers working in Vietnam are eligible to apply for lump-sum social insurance benefits if they meet the following conditions:
(1) Foreign workers who are eligible to join Vietnam’s compulsory social insurance and who are already enrolled in it
Foreign workers working in Vietnam are eligible to join Vietnam’s compulsory social insurance if they meet the following four conditions (※1).
1) Have a work permit.
2) Have signed a fixed-term employment contract with an employer in Vietnam for a period of one year or more.
3) Have not reached the mandatory retirement age (the mandatory retirement age in 2023 is 60 years and 9 months for men and 56 years for women).
4) It does not qualify as an internal transfer.
According to the above conditions, foreign workers who hold a work permit (or a work permit exemption certificate) with an “intra-company transfer” work type are not subject to compulsory social insurance. Therefore, they will not be eligible to receive lump-sum social insurance payments from Vietnamese social insurance institutions.
(2) Foreign workers who fall under any of the following categories:
1) You have reached the retirement pension eligibility age under Vietnamese laws, but have paid social insurance contributions for less than 20 years.
2) Having a life-threatening illness (e.g. cancer, polio, cirrhosis of the liver, leprosy, severe tuberculosis, HIV infection that has progressed to AIDS, and other illnesses as defined by the Ministry of Health).
3) You are eligible for retirement pension but no longer reside in Vietnam.
4) Your employment contract with your Vietnamese employer has ended or your work permit has expired, but you do not plan to apply for an extension.
Of the above, 3) and 4) are common cases in Vietnam. A typical example is when a foreign worker leaves a Vietnamese company and returns to his/her home country at the end of his/her contract. Other cases include when a foreign worker terminates his/her employment contract with the company unilaterally and by agreement, or when a foreign worker’s work permit has expired but the extension procedure has not been carried out.
Therefore, foreign workers can apply for lump-sum social insurance benefits from Vietnamese social insurance institutions if they meet either of the two conditions above. In addition, the lump-sum social insurance payment system for foreign workers came into effect on January 1, 2022, so foreign workers can currently apply for lump-sum payments in Vietnam.
2. Amount of social insurance lump sum payment received by foreign workers
The amount of the social insurance lump sum payment is calculated based on the number of years you have paid into social insurance. If you have been enrolled in compulsory social insurance for one year, you will receive an amount equivalent to two months’ average salary, which is the basis for social insurance premiums during that period (※3).
3. Application procedures and documents for receiving lump-sum social insurance benefits for foreign workers
(1) Application documents
Foreign workers who leave a Vietnamese company are required to submit an application for lump-sum social insurance payment in order to receive the lump-sum social insurance payment.
(2) Procedures
Foreign workers who wish to receive lump-sum social insurance benefits but do not continue working under a labor contract or do not apply for an extension of their work permit must submit an application for lump-sum social insurance benefits at least 10 days before the end of their labor contract or the expiration date of their work permit (it is necessary to check in advance which deadline occurs first).
The local social insurance agency will review the application documents within a maximum of five business days from the date of receipt of the documents, which are in accordance with the regulations and are complete. (※4) If the application is approved, the social insurance agency will make a decision on the lump-sum social insurance payment, the social insurance contribution record, and the amount of the lump-sum social insurance payment.
In order for the social insurance agency to review the application documents, foreign workers may be required to submit additional documents proving that they are eligible to receive social insurance lump-sum benefits. As a result, the actual processing time for applications may be longer.
4. Other precautions
(1) Form of application documents to be submitted to the social insurance institution
According to the provisions of Decision No. 166/QD-BHXH of 2019 and Decision No. 222/QD-BHXH of 2021, the current submission format is as follows:
– Submitted via electronic trading.
– Submit via the public postal service.
・Submit directly to the social insurance institution.
Foreign workers who wish to apply for lump-sum social insurance benefits can consider and choose the submission format that best suits their situation from the above formats. In addition, relevant documents and application results will be notified according to the submission format selected (one of the three formats above). On the other hand, lump-sum social insurance payments can be collected directly from the social insurance institution, through the public postal service or through a personal account.
(2) Entrusting the application process to another person
The reality is that there are very few foreign workers who are aware of the procedures for applying for lump-sum social insurance benefits, and very few who have actually applied. The reason for this is that foreigners are hesitant to go through administrative procedures in Vietnam. If a foreign worker finds it difficult to carry out the procedures himself/herself, he/she may delegate the procedure to another person in Vietnam who is familiar with the application procedures for lump-sum social insurance benefits. However, when delegating, a power of attorney in accordance with Vietnamese laws is required.
Conclusion
Many foreign workers working in Vietnam are subject to Vietnam’s compulsory social insurance system and pay social insurance premiums, but the reality is that many of them return to their home countries after a short period of employment. In this context, in order to make the most of the rights granted to them by law, foreign workers are advised to properly understand the terms of the Social Insurance Lump-Sum Benefit Scheme and, if applicable, submit benefit application documents.
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References
1: Article 2 of Decree No. 143/2018/ND-CP
2: Article 9, paragraph 6 of Decree No. 143/2018/ND-CP
3. Article 9, paragraph 7 of Decree No. 143/2018/ND-CP and Article 60, paragraph 2, sub-item b of the Social Insurance Act of 2014
4: Article 15, paragraph 3 of Decree No. 143/2018/ND-CP
*This article was translated by Yarakuzen.
