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ECONOMIC NEWS

Benefits of Social Insurance

Recently, some social networking sites have compared the benefits between participating in social insurance to enjoy pensions with life insurance, and saving. First, it must be affirmed that the direct comparison of its product with that of another enterprise is a violation of Article 43 and Article 45 of the Competition Law.

Looking from international experience, in many countries with developed economies, modernized industry at the most advanced level, the market economy is built completely, operating with all inherent rules.  The question is, do people in their countries compare the way some of us do? In those countries, with a large number of big names in commercial insurance, life insurance, with large-scale commercial banking systems, but why social insurance policies are still maintained sustainably by countries and always consider this an important policy that the State must maintain, in addition to the private and commercial insurance system. More importantly, pensions received from social insurance are still the basic source of income for all the elderly in developed countries; Revenue from commercial insurance or bank savings has never been enough to ensure the well-being of the community in every country.

It must be confirmed that the calculation that joining social insurance to enjoy pension benefits when retirement is lower than benefits when they save or participate in life insurance for 20 years is completely wrong because between social insurance and having savings or buying life insurance are very different: - The biggest difference is in the purpose: social insurance is a type of non-profit insurance and the social insurance fund is protected by the State meaning not to go bankrupt, while banks operate for profit, business The most profitable business may also be bankrupt, in the case of bankruptcy, savings deposits may be lost.

- When depositing savings, participants are entitled to an interest based on the term of the deposit, after about 2 to 3 decades, the value of the remaining principal is very small. This is the opposite of the social insurance when the social insurance premium is returned by adjusting to increase the consumer price index (CPI) over the years as prescribed by the Government and become a basis for calculating pensions. During the time of participating in social insurance upon death, the time of payment of social insurance premium is recognized to calculate the entitlement to death benefits.

- Once the pension has been enjoyed, the pension rate is periodically adjusted according to the consumer price index and economic growth. In fact, nearly every year the State adjusts the pension increase. Only for the period from 2003 up to now, the Government has repeatedly adjusted pensions with an increase from about 7.5 to 9.3 times (depending on the target group) compared to the pension level as of 2002. In addition, during the entire period of pension entitlement, the employee is paid by the social insurance fund to issue the health insurance card and is entitled to equal medical examination and treatment benefits with everyone else regardless of the fee. Family, type of disease ... When the death of a survivor, the person in charge of a funeral is still entitled to a funeral allowance equal to 10 months of the basic salary at the time of death. times). This is a remarkable advantage of social insurance. As for savings deposit, the interest amount is determined level and the value of the interest will be lower and lower due to the impact of inflation (inflation).

To compare the benefits of investing in voluntary social insurance compared to the savings of a person participating in social insurance and depositing savings, we have done a problem with the following real assumptions:

- Payment of social insurance and savings deposit for 20 years from 2008 (2008 is the first year of implementation of voluntary social insurance) with the savings deposit equal to the amount of social insurance premium maintained for 20 years and the social insurance premium calculated by the percentage specified in each period on the amount chosen by the participants as the basis for payment of social insurance premium of VND 5,000,000.

- Savings interest rate: 7% / year; Calculated according to gross profit for each year.

- Adjustment index of social insurance premium based on the consumer price index (CPI) of 5% / year from year t-1 (the CPI has increased by an average of 8.1% / year from 2008 to the present);

 

- Participants enjoying pension from 2028 when 55 years old for women, the percentage of pension entitlement is 55% (men full 60 years old, the rate is 45%);

- The average pension adjustment increase: 7% / year (taken lower than the lowest increase from 1993 to 2017).

- Expectation of 20 years after retirement;

- The base salary at the time of 2048 is VND 10,000,000, an increase of 8.27% / year (from 2008 to June 2017 the average base salary increase is 13.7% / year);

- One-time death subsidy equal to 3 months of pension at the time of death (the lowest level as prescribed).

- The pension level is calculated according to the current regulations. Result: Along with the investment amount of VND 249,600,000, but for participating in voluntary social insurance, they are entitled to a lifetime social security benefit with the total amount of VND 2,160,690,000 for women and for men. 1,786,019,000 VND; more than saving with a very large amount of VND 973,333,000 for women and VND 598,303,000 for men) .In case of compulsory social insurance, the benefits are extremely large due to the amount of money that workers have to spend. social insurance contribution is only 90,763,600 VND, because the rest is paid by the unit. In addition, employees during the period of pension entitlement are covered by health insurance fund with an unspecified amount because everyone knows that once on the other side of life, the cost of Medical care for most elderly people is great./.

Date Submitted: 24/07/2018 View: 31.925 Print the article
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