What is voluntary social insurance and what are its contribution rates in the US?

What is voluntary social insurance and what are its contribution rates in the US? Voluntary Social Insurance: What It Is, Eligibility, and Benefits

Participating in voluntary social insurance is a way to protect yourself and your family against income loss or health issues. So, what exactly is voluntary social insurance? What are the conditions and benefits for participants? All these questions will be answered in the article below.

Voluntary Social Insurance Scheme

Voluntary social insurance (VSI) is a social insurance scheme protected by the State.

1. What is Voluntary Social Insurance?

Voluntary social insurance is a type of social insurance organized by the State, where participants have the right to choose the contribution amount and payment method that best fit their financial situation and income.
What is voluntary social insurance and what are its contribution rates in the US?

This scheme entitles participants to retirement and survivor benefits when they are no longer able to work. Below are some key benefits for voluntary social insurance participants.

1.1 What are the Benefits of Participating in VSI?

Participants receive the following benefits when joining voluntary social insurance:

1. Monthly pension payments upon retirement if you meet the age and contribution period requirements. The pension amount is calculated as a percentage of the average monthly income on which contributions were based. Pensions are also adjusted according to inflation and economic growth.

2. Free health insurance cards during the pension period, providing free or discounted medical services at public healthcare facilities.

3. Partial financial support from the State for contributions to VSI. The support amount is calculated as a percentage of the monthly contribution based on the rural poverty line, provided for up to 10 years.

4. Funeral and survivor allowances upon death. The person responsible for funeral expenses receives a lump sum equal to ten times the basic salary at the time of death. The deceased’s relatives receive a one-time survivor allowance, calculated based on years of contribution, with each year valued at 1.5 to 2 months of the average monthly income on which contributions were paid.

5. A one-time social insurance payment in special cases such as discontinuing participation, emigrating abroad, or suffering from life-threatening illnesses. This payment is calculated similarly based on years of contribution.

1.2 What Are the Conditions for Participating in VSI?

According to Clause 4, Article 2 of the Social Insurance Law No. 58/2014/QH13 dated November 20, 2014, Vietnamese citizens aged 15 and above, who are not subject to compulsory social insurance, are eligible to participate in VSI.

Therefore, the requirements for participation are:

• Vietnamese citizens aged 15 years or older.

• Not covered by compulsory social insurance.

• Have the willingness and ability to pay voluntary social insurance contributions.

1.3 Who Can Participate in VSI?

Eligible groups include:

• Workers employed under contracts shorter than one month.

• Non-full-time officials in villages, hamlets, communes, or urban neighborhoods.

• Domestic helpers.

• People engaged in production, business, or unpaid services.

• Cooperative members working without salary or wages.

• Farmers and self-employed workers.

• Workers who have reached retirement age but lack sufficient contribution time for pension eligibility.

• Other eligible individuals who meet the conditions.

2. What Benefits Does VSI Include?

According to Clause 2, Article 4 of the 2014 Social Insurance Law, VSI participants are entitled to benefits from two regimes: retirement and survivor, similar to compulsory social insurance participants.

The benefits and allowances include:

• Monthly pension payments.

• One-time allowances.

• Funeral allowances.

• One-time survivor allowances.

• Medical examination and treatment benefits under health insurance.

Compared to compulsory social insurance, VSI offers fewer benefits as it does not cover sickness, maternity, or occupational accident and disease allowances. However, VSI provides flexibility in contribution methods and rates and enables those not eligible for compulsory insurance to still receive a pension in old age.

3. VSI Contribution Rates

According to Article 87 of the 2014 Social Insurance Law, VSI contributors pay 22% monthly of the income level they select for their retirement and survivor fund contributions. The minimum income used for contributions equals the rural poverty line, and the maximum is 20 times the basic salary.

Participants may choose from the following payment methods:

1. Periodic payments:

   • Monthly.

   • Every 3 months.

   • Every 6 months.

   • Annually.

   • Multiple years at once (up to 5 years), with a lower rate than monthly payments.

2. One-time payment for missing years (up to 10 years) to qualify for pension benefits, at a higher rate than regular monthly payments.

The monthly VSI contribution formula:

Contribution = 22% × Selected Income – State Subsidy

Where the selected income must be between the rural poverty line and 20 times the basic salary.

For 2024, VSI contribution rates are:

• Maximum: 20 × basic salary (2,340,000 VND as of July 1, 2024) = 46,800,000 VND/month.

• Minimum: rural poverty line = 1,500,000 VND/month.

The State subsidy equals 22% of the minimum contribution based on the rural poverty line, up to 10 years, which is 330,000 VND/month.

Here’s a table showing State subsidies by group for 2024:

The subsidy duration depends on actual participation time but cannot exceed 120 months (10 years).

For example, if your selected monthly income is 5 million VND and you do not belong to poor or near-poor groups, your subsidy is 10% or 33,000 VND. Therefore, your monthly contribution is:
What is voluntary social insurance and what are its contribution rates in the US?

22% × 5,000,000 – 33,000 = 1,067,000 VND.

This flexibility and State support make VSI accessible for people facing financial difficulties, contributing toward nationwide social security.

4. VSI Benefit Levels

Based on Chapter 4 of the 2014 Social Insurance Law and amendments in 2024, VSI benefits include:

4.1 Retirement Pension Benefits

Participants who have contributed at least 20 years and reached retirement age can receive a pension. For 2024, retirement age is 61 for men and 56 years 4 months for women.

Those who have reached retirement age but lack sufficient contribution years can make a lump-sum payment for up to 10 missing years to qualify.

4.1.1 Monthly Pension Calculation

According to Decree 134/2015/ND-CP, the monthly pension is:

Monthly pension = Benefit rate × Average monthly income on which contributions were based

The benefit rate starts at 45% for 20 years of contributions (15 years for women), increasing by 2% per additional year up to a maximum of 75%.

Higher contributions yield higher pensions.

Those with at least 20 years of contributions receive monthly pensions regardless of voluntary or compulsory participation.

Retirees also receive free health insurance cards during pension receipt and pension adjustments based on consumer price index and economic growth.

4.1.2 One-time Social Insurance Payment

Participants reaching retirement age but with fewer than 20 contribution years may withdraw a one-time payment if they do not continue contributions.

Early withdrawal is also possible for participants emigrating abroad or suffering life-threatening illnesses.

Those who stop contributing for more than one year may request one-time withdrawal.

The one-time payment is calculated as:

• 1.5 months of average monthly contribution income per year of contributions before 2014.

• 2 months of average monthly contribution income per year of contributions since 2014.

If contributions are less than one year, the payout equals the total amount paid, capped at two months’ average income.

Note: State subsidies are excluded from the payout unless the participant has a life-threatening illness.

4.2 Survivor Benefits

Participants’ survivors are entitled to:

4.2.1 Funeral Allowance

The person responsible for funeral costs receives a lump sum equal to ten times the basic salary at the participant’s death, provided the deceased had at least 60 months of contributions or was receiving a pension.

4.2.2 One-time Survivor Allowance

For participants or those preserving contribution time who die, relatives receive a one-time allowance based on years contributed, using the same 1.5 and 2 months per year scale as above.

If contributions are less than one year, the payout equals total contributions, capped at two months’ average income.

For those with combined compulsory and voluntary contributions, survivors receive a minimum of three months’ average income.

If the participant was receiving a pension at death, survivor allowance is calculated based on pension months received, with specific rules for timing.

4.3 Does VSI Cover Maternity Benefits?

No. VSI only covers retirement and survivor benefits, excluding maternity benefits.

To receive maternity benefits, one must participate in compulsory social insurance and meet these conditions:

• Be an employee under a labor contract of one month or longer, or be a salaried officer, public servant, or cooperative manager.

• Have paid social insurance contributions for at least six months within the 12 months before maternity leave.

• Take maternity leave as regulated by labor law.

5. How to Temporarily Suspend VSI Contributions

Under the 2014 Social Insurance Law and Decree 134/2015/ND-CP, participants may temporarily suspend contributions if unable or unwilling to continue.
What is voluntary social insurance and what are its contribution rates in the US?

Steps to suspend contributions:

1. Write a request to suspend VSI contributions to the social insurance agency where you registered. Include reasons, suspension period, and total months paid.

2. Submit the request with your VSI book (if any) in person or by mail.

3. Receive a certificate confirming suspension, which states the suspension period and allowed resumption time.

Notes:

• Suspension time does not count toward contribution periods for benefits.

• Suspended participants cannot claim benefits during suspension.

• To resume contributions, participants must re-register their income base and payment method with the social insurance agency.

You can resume VSI by submitting a re-enrollment request along with the suspension certificate and VSI book (if any).

We hope this information is helpful. If you have further questions, please contact your local Social Insurance Agency or use the EBH electronic social insurance system for detailed advice.