VietNamNet Bridge – The national voluntary social insurance programme aims to provide insurance to society's most vulnerable groups, but many intended beneficiaries are uninformed or unable to participate.

Lai Thi Tam was confused.

"What is it? It is the first time I've heard of it," she said. The 40-year-old farmer turned domestic help said no one had told her about something called voluntary social insurance.

Uninsured: The northern province of Nam Dinh attracts many labourers due to its fisheries industry. Most have not enrolled in the insurance programme.

When informed that it was a scheme that would enable her to receive some pension once she retired, Tam's confusion persisted.

As farmers, her five-member family had toiled from dawn to dusk, but their combined efforts were insufficient to make ends meet. Eventually, Tam and her children had to move to Ha Noi and do manual work.

Tam earns between VND2 million and 3 million (US$95-140) a month from the job that she has been doing for the last seven years. The money barely keeps them afloat, so setting money aside to buy insurance for a pension when she retires is not something that has crossed her mind.

Once the principle of the scheme was explained, she said, "I know buying this insurance would be good for me when I get old and can no longer work. But I don't have the money to buy it."

After a pause, she continued: "I know that my boss has bought it for her three-year-old daughter. She pays the insurance company a certain amount of money each month, and in return, the company will pay her back a lump sum after a few years."

Tam did not realise that she was talking about a life insurance scheme, not the voluntary social insurance scheme.

The confusion, lack of awareness and a paucity of clear information and understanding about this scheme is so widespread that the Government's ambitious effort to widen the nation's social security network has so far been a damp squib, six years on.

Unlike Tam, Pham Thi Lan Anh, 48, has a stable income as a hairdresser and is aware of the scheme, but unaware that she is not eligible.

"I would have to pay insurance fees for 20 years before I become eligible for the retirement allowance at the age of 68. Besides this, I will not receive disbursements for illnesses and occupational diseases but only for retirement and death (funeral expenses).

"I know that there are different rates that the insurance payer can choose, with the lowest rate equal to the minimum wage for one month and the highest rate equivalent to the minimum wage for 20 months, but I have no idea how much the insurer will pay us after 20 years or where I can go to pay the insurance fees."

The scheme is only open to men aged 40 or younger and women 35 or younger, based on the respective retirement ages of 60 and 55, which would give them the minimum 20 years of insurance premium payments needed.

No takers

Given that the number of people who are self-employed constitute a significant part of the nation's workforce, the coverage provided by the voluntary insurance scheme has been miniscule.

Dedication: Staff at social security agencies get no commission when introducing the voluntary scheme.

Just 173,584 of the 56 million workforce, or 0.3 per cent, are covered by voluntary social insurance, according to the Social Security Department of the Ministry of Labour, Invalids and Social Affairs.

Besides, up to 70 per cent of these insured were originally buyers of compulsory social insurance, but transferred to the voluntary one because they fell short of the requirements for receiving retirement pension and funeral service allowance by a number of years, said department director Tran Thi Thuy Nga.

"The number of farmers and self-employed people covered by voluntary social insurance is very low," Nga said in evident disappointment.

Adopted in 2008, the Social Insurance Law regulates that farmers, members of co-operatives, seasonal labourers and other people in the informal labour sector can take part in the voluntary retirement savings scheme.

The insurance is calculated according to the buyers' contribution of the statutory minimum wage over 20 years. However, the voluntary scheme does not offer the same benefits as the compulsory insurance plan, which covers treatment for illnesses, occupational accidents and diseases, pregnancy, and so on, said Do Thi Xuan Phuong, deputy general director of Viet Nam Social Security.

However, she added, the National Assembly Standing Committee has called for policies offering greater benefits and incentives for people covered by the voluntary scheme.

She stressed that despite its shortcomings, the scheme will benefit the self-employed, since it protects them from risks associated with old age including illnesses and financial difficulties. (Those who sign up for the scheme are also given a medical insurance card that will take effect on retirement or after 20 years.) However, very few people are aware of this, she admitted.

Last year, a survey of 1,000 workers in the informal sector in Ha Noi, Hai Duong, Nghe An, Ha Tinh, Long An and Ho Chi Minh City found that 53 per cent had a poor understanding of the scheme.

In addition, the survey indicated that another 30 per cent of respondents did not completely understand the scheme.

Nga said the scheme's inflexibility and other factors were to blame for the situation.

"Most of them are farmers and self-employed workers whose incomes are unstable and low, whereas those who show interest in the scheme are required by law to pay premiums over 20 consecutive years," Nga pointed out.

"This effectively excludes men aged over 40 and women above the age of 35."

The high rate of premiums was another hindrance, she said.

The lowest rate is calculated by multiplying the monthly wage of no less than VND1,150,000 ($54) with the voluntary insurance ratio of 22 per cent.

Unstable livelihood: This street vendor has no social security to fall back on.

"This means that a person has to pay at least VND253,000 ($11) every month. This is not a lot for well-off families, but it is not a small amount for the self-employed whose monthly income averages between VND1 million and 2 million."

She also said that the national social security administration "is most likely to have no mode of approaching people to help them understand the scheme. The result is that it remains unknown to many people."

Xuan Phuong said other social organisations, not just the social security agency, were also responsible for raising people's awareness of the programme.

"Funding constraints hamper our efforts to disseminate information about the scheme, so many people remain unsure about how they can benefit from it."

A shortage of personnel also prevents Viet Nam Social Security from expanding the scheme's reach, said Xuan Phuong, explaining that there was no staff of the agency working in communes and wards.

"It would be ideal if we can go to people's homes after office hours and explain the scheme to them," she said.

At present, each social security agency in a district has just one staff member in charge of collecting premiums and promoting all insurance schemes.

It is hard for just one person to handle the number of people covered by compulsory social insurance, let alone develop the voluntary scheme. Also, the staff working on the voluntary scheme get no commission, so the incentive is lacking, Xuan Phuong added.

A basic need

Phuong said that everyone agrees on the need for increasing the number of informal sector workers who have insurance, and that it is a duty to provide this financial security.

Raising awareness: A social insurance worker introduces fish traders to the voluntary retirement savings scheme in Yen Bai province. Such awareness-raising programmes remain rare.

Labour, Invalids and Social Affairs Deputy Minister Nguyen Trong Dam said attracting more people in the informal sector to enroll in the voluntary retirement savings scheme was key to connecting them to the social security network.

Deputy head of the Institute of Sociology's Social Security and Social Work Department, Dang Thi Viet Phuong, noted that nearly 70 per cent of the population earn their livelihoods from agriculture, and today, most poor people are farmers who earn their living mainly from seasonal and manual work. Such people have no security to fall back on in their old days.

With 82 per cent of the rural workforce having no training, unemployment forces many farmers to migrate to large cities and provinces to find jobs in the informal sector, said Le Van Banh, head of the Cuu Long Delta Rice Research Institute.

"Farmers are prone to risks and are vulnerable, especially since the country increasingly integrates into the global economy and has to cope with the negative impacts of climate change," he said, underscoring the great need for social security coverage for the informal sector.

Nguyen Hoai Son with the Institute of Sociology said poverty and vulnerability increases when people have very few choices and opportunities to develop, and lack social protection.

"It remains a challenge for Viet Nam to build a multi-layer social security network to support vulnerable groups like farmers in dealing with economic and environmental shocks," he said.

"Current social security programmes mainly target the formal sector. Farmers, the poor, immigrant labourers and other people working in the informal sector have little access to this network."

International organisations say a social security system should have three basic components - risk prevention policies, risk mitigation policies, and risk control measures. Social insurance policies are an important component of risk mitigation policies, Viet Phuong said.

Son said providing social security services to farmers essentially creates a safety net that enhances their coping mechanisms. This also forms the basis for them to access other crucial services like education, vocational training and health care, reducing their vulnerability and increasing their confidence, he added.

Viet Nam is striving to increase the number of people covered by compulsory and voluntary social insurance to 29 million by 2020, from around 11 million at present.

The goal is achievable if efforts to attract more people in the informal sector to participate in the voluntary retirement savings scheme, said chairwoman of the National Assembly's Committee for Social Affairs, Truong Thi Mai.

The State needs to financially support people who take part in the programme, she added.

Until such support becomes reality, people like Tam, the farmer turned domestic help, have to rely on the old, traditional buffers of kinship and reciprocity.

She firmly believes that her three sons are grateful for her sacrifices and would care for her in her old age.

Smiling, she said: "They are dutiful children, so they will not throw me out."

VNS/VNN