Exiting social insurance scheme early continues to be large trend in Vietnam

HCMC alone had more than 37,000 people applying for the lump sum payout, an increase of about 19 percent over the same period last year. In Thu Duc City, District 12, Binh Tan, Hoc Mon and Binh Chanh such withdrawals overloaded insurance agencies, according to Vietnam Social Security, the national agency that oversees the payouts.

These workers will get meager to no pension when they retire; and cannot enjoy free health insurance.

"This is a worrying state and it's directly affecting labor rights and welfare when Vietnam's population is beginning to age," a Vietnam Social Security report said.

The agency is advising workers against choosing the one-time withdrawal option, encouraging them instead to pay or participate in social insurance fully to enjoy decent pension and 95 percent health insurance after retirement.

From 2016 to 2020, more than 3.7 million people chose the lump sum withdrawals of their social insurance. Nearly 750,000 people leave the system every year, accounting for over 5 percent of the total number of participants. For every two people who join the social insurance system, one is leaving early and the trend shows no sign of stopping.

Most of the people (97 percent) who choose the one-time withdrawal option are those who have been unemployed for a year. They are mainly young people 26-29 years old, working outside the state agencies. More women (55.6 percent) than men (44.4 percent) choose the one-time withdrawal option.

According to the current policy, people with social insurance are only eligible for receiving a pension after 20 years of paying premiums. The conditions for withdrawing social insurance at one time are quite easy to fulfill at the moment. Participants of mandatory social insurance scheme can withdraw it after one year of unemployment; and voluntary participants after one year of not paying premiums.

According to a resolution of the Party Central Committee in 2018 on reforming social insurance policies, the minimum period of social insurance payment to enjoy a pension can be reduced from 20 to 15, even 10 years, creating more relaxed conditions for employees to enjoy pension early. The government plans to develop this policy and submit it to the National Assembly for adjustment and approval soon.