Cases of paying social insurance for 15 years have not received pension

In the latest draft of the revised Law on Social Insurance, the Ministry of Labor, Invalids and Social Affairs has added some content to the proposal to reduce the condition on the minimum number of years of social insurance contributions to receive monthly pension from 20 years to 15 years, in order to create opportunities for late participants, or those who have not participated continuously and have a short period of social insurance contributions to receive pension.

According to the Ministry of Labor, Invalids and Social Affairs, in the 7 years of implementing the 2014 Social Insurance Law, over 476,000 people who received one-time social insurance had participated in social insurance for over 10 years and were aged 40 or older; over 53,000 people who were past retirement age had to receive one-time social insurance because they had not paid 20 years of compulsory social insurance; over 20,000 people who reached retirement age had not paid enough time and had to pay one-time for the remaining time to receive salary.

Therefore, if the minimum pension period is still 20 years, these people will have little chance of receiving pension.

To overcome the above shortcomings, Article 64 of the draft Law on Social Insurance (amended) stipulates that employees who reach retirement age and have paid social insurance for 15 years or more are entitled to receive a monthly pension.

This regulation aims to create opportunities for late participants (starting participation at 45-47 years old) or those who participate intermittently, leading to not having accumulated enough 20 years of social insurance contributions when reaching retirement age, to also receive monthly pensions instead of having to receive social insurance in one lump sum.

With the above regulation, the pension level of these people may be lower than that of those with a long payment period if the salary used as the basis for compulsory social insurance payment or the income used as the basis for voluntary social insurance payment is the same.

However, these cases were previously not eligible for pension, they received social insurance one time (if they did not choose to voluntarily pay one time for the missing period), but now will have the opportunity to receive monthly pension.

The Ministry of Labor, Invalids and Social Affairs also proposed a regulation to reduce the minimum number of years of social insurance contributions to receive monthly pension from 20 years to 15 years, only applicable to cases of retirement under Article 64 and not applicable to cases of early retirement before the prescribed age (Article 65).

For cases of early retirement in Article 65 of the draft Law on Social Insurance (amended), each year of retirement before the prescribed age will have the pension rate reduced by 2%.

Thus, if the above regulation is applied to retirement cases in Article 65, it will lead to a situation where the pension rate is too low due to the short contribution period, the rate is deducted due to early retirement; the pension level is too low, not very meaningful.

For example, a male worker who has paid social insurance for 15 years has a pension rate of 33.75%. If he retires 5 years early and is deducted 10%, the pension rate will only be 23.75%.

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