Viet Nam would struggle to pay millions of its retirees pensions soon in the future as only about 20 per cent of the workforce are currently contributing to the social insurance fund.

Speaking at a conference on Thursday to discuss the implementation of the amended Law on Social Insurance, which was approved recently by the National Assembly, Head of the NA Committee on Social Affairs Truong Thi Mai said the key to solving the problem was to encourage more people in the informal economy to participate in social insurance.

The law will become effective on January 1 next year.

According to Mai, as of December 31, 2014, more than 11.6 million workers are covered by social insurance. Among them, only about 196,000 people are under the voluntary social insurance scheme.

Pham Do Nhat Tan, former head of the Department of Social Insurance at the Labour Ministry, said there would be major challenges in implementing the law.

One of the challenges, he said, was that employers and employees have been finding ways to avoid paying social insurance. Lack of transparency and burdens in paperwork made it difficult for government agencies to manage beneficiaries, according to Tan.

Viet Nam aims to have 29 million workers participating in social insurance by 2020.

Do Van Sinh, deputy director of the Viet Nam Social Insurance Agency, said that Viet Nam should criminalise those who avoid paying social insurance and appropriate social insurance money of workers.

Bui Sy Loi, deputy chairperson of the NA Committee on Social Affairs, said there must be increased efforts to raise the awareness of people, especially farmers, on the benefit of paying social insurance.

The amended Law also allows social-insurance agencies to inspect companies that avoid their insurance obligations.

Deputy Labour Minister Pham Minh Huan said the labour ministry in co-ordination with other relevant agencies would issue guidelines and decrees on implementing the amended law.

According to Do Van Sinh, deputy director of Viet Nam Social Insurance Agency, the sector aimed at building a complete online database on managing social insurance by 2020.

The International Labour Organisation has previously warned that the Viet Nam Social Security Fund could start reporting deficits by 2021 and run out of money by 2034 if no reforms were made.

VNS