Nguyen Thi Mai, 43, an employee at a media company in Hai Ba Trung District in Hanoi, said her salary for social insurance contributions is just over VND9 million/month, while her actual income is VND18-20 million.

“Businesses apply a payment method based on agreements and work performance, but social insurance premium is paid based on the state-regulated salary coefficient. This disadvantages workers. I hope the social insurance contributions truly reflect the actual income, so that my pension is sufficient for living in old age,” Mai said.

Vietnam Social Security (VSS) points out that the salary used to calculate social insurance contributions is often low compared to actual income. This affects workers’ benefits, especially their retirement pension.

This occurs because many businesses don’t fully comply with regulations, circumventing the laws by splitting workers’ income into various allowances and subsidies to “evade” contributions, while social insurance agencies lack the legal basis to enforce contributions on these amounts.

This explains why the income used to calculate social insurance contributions is just equal to 50-60 percent of workers’ real income. 

In feedback to the draft regulation detailing and guiding the implementation of certain provisions of the Social Insurance Law on mandatory social insurance, VSS proposed specifying the income items exempt from contributions.

The salary used for mandatory social insurance contributions excludes benefits such as bonuses under Article 104 of the Labor Code; rewards for initiatives; meal allowances, allowances for fuel, phone, travel, housing, and childcare; support for workers with deceased relatives, weddings, birthdays, assistance for workers facing difficulties due to occupational accidents or diseases, and other subsidies listed separately in labor contracts as per labor law.

According to a labor expert, many businesses pay piecework wages to workers. They don’t have salary scales and do not have a regular salary increase policy, only raising salaries when the Government adjusts the regional minimum wage. As a result, the salary for social insurance contributions is just half or one-third of total actual income.

To improve social insurance contribution levels, the expert said authorities need to better monitor businesses’ salary scales. This would prevent companies from using multiple salary scales to evade contributions and ensure that total allowances are below 30 percent of actual salary.

Former Deputy Minister of Labor, War Invalids and Social Affairs Pham Minh Huan said it is necessary to stipulate that the income used to calculate social insurance contributions must be equal to at least 70-80 percent of workers’ stable income.

Vu Diep