Investment activities from insurance funds

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The Decree clearly states that investment activities from the Social Insurance, Health Insurance and Unemployment Insurance funds must comply with the investment principles of each fund as stipulated in the Law on Social Insurance, the Law on Health Insurance and the Law on Employment. The priority for investment in Government bonds, especially long-term Government bonds, is decided by the Social Insurance Management Board (Management Board) in the annual investment plan and is determined by the ratio of the balance of Government bonds compared to the total balance of the investment portfolio of Vietnam Social Insurance.
Portfolio
The domestic market portfolio includes the following products:
1- Government debt instruments include government bonds, treasury bills, and national construction bonds;
2- Local government bonds, government-guaranteed bonds;
3- Deposits at State-owned commercial banks and joint-stock commercial banks with State capital of over 50% of charter capital; not investing in commercial banks under special control;
4- Bonds and deposit certificates of State-owned commercial banks and joint-stock commercial banks with State capital of over 50% of charter capital; do not invest in commercial banks under special control.
Investment portfolio in international market is government bonds
Investment method:
According to the decree, Vietnam Social Security will carry out self-investment or entrust investment. In case of entrustment investment, Vietnam Social Security will develop an implementation plan to report to the Board of Management for approval in the annual investment plan.
Based on the plan approved by the Management Board, Vietnam Social Security selects an investment trust organization and signs a contract.
Annual risk reserve fund deduction not exceeding 2% of investment profit
Regarding the use of profits from investment activities, the decree clearly states that all profits from investment activities are used as follows:
- Set up a risk reserve fund in investment activities from the Social Insurance, Health Insurance and Unemployment Insurance funds according to the principle: The maximum annual risk reserve fund deduction shall not exceed 2% of the profit from investment activities until the risk reserve fund balance is equal to 5% of the outstanding investment balance in the products specified in Clauses 3 and 4 of the above Investment Portfolio of the previous year. The specific deduction level shall be decided by the Director of Vietnam Social Security. The risk reserve fund during the unused period shall be invested in government debt instruments.
The remaining amount is allocated to the Social Insurance, Health Insurance and Unemployment Insurance funds according to the ratio of the profit contributed by each Social Insurance, Health Insurance and Unemployment Insurance fund to the total profit of the Social Insurance, Health Insurance and Unemployment Insurance funds in the year and used as follows:
- Profits are allocated to the Social Insurance Fund after deducting expenses for organizing and operating Social Insurance according to the provisions of law, the remaining amount is added to the component funds according to the ratio of the profit contributed by each component fund to the total profit of the Social Insurance Fund;
- Profits allocated to the health insurance fund are added to the reserve fund for use in accordance with the provisions of law;
- Profits allocated to the unemployment insurance fund are added to the unemployment insurance fund for use in accordance with the provisions of law.
The allocation and use of profit according to the above regulations is carried out monthly and is adjusted when making annual settlement...