As many people quit Vietnam’s social security system as were joining it

More than 4.25 million people joined the system between 2016 and 2021. However, 4.06 million people quit during the period, withdrawing a total VND131.94 trillion (US$5.56 billion), according to the Ministry of Labor, Invalids and Social Affairs.

The number of people quitting the system increased 11% per year on average during the five years, it said.

Most of the people who withdrew their social insurance, nearly 2.9 million, or 90.7%, worked for private firms, 8% worked in the state sector and the remaining 1.2% were freelance workers who paid for the insurance themselves.

The ministry attributed the rising trend of people withdrawing from the social security system to the fact that many workers in industrial parks do not have much savings. Once they are laid off, they would turn to the social insurance fund to support their daily living.

The Covid-19 pandemic and the layoff wave that followed have accelerated the withdrawal from the social insurance system, according to the ministry.

People between 20-40 years of age accounted for 77.5% of those leaving the social security system over the surveyed five years from 2016 to 2021, the ministry found.

The ministry said the withdrawal will increase pressure on the state budget, which will have to take care of a large number of people who will not have a pension in the future.

Amendments to the Social Insurance Law being drafted by the ministry aim to secure social insurance funding.

One proposal is to cut the number of years one needs to contribute to the fund to be eligible for a pension from 20 to 15 years.

The second proposal is to prevent people from withdrawing their entire social insurance contributions. One will only be allowed to withdraw half of their contributions, and must leave the other half in the system until they can contribute enough to earn a pension, according to the amendments which are expected to be open for the discussion at a National Assembly session in October.

In 2015, when the ministry proposed to ban laid off workers from withdrawing their social insurance contributions, mass wildcat strikes followed, forcing the proposal to be scrapped.