LookAtVietnam – The number of voluntary social insurance participants remains low after more than a year in operation, mainly due to a lack of consulting staff and poor communication systems.

Doctors examine insured patients in the central province of Quang Ngai. Many people have avoided signing up for voluntary insurance due to a lack of staff and information systems.

According to the Viet Nam Social Insurance Agency (VNSIA), at the end of 2008, only 6,500 people had partook in voluntary social insurance, and many provinces had yet to get with the programme.

Explaining the situation, VNSIA Deputy Director Nguyen Dinh Khuong said, “The minimum level of contributions (equivalent to at least 16 per cent of wages) is pretty high compared to the average income of an informal sector worker.

“Most importantly, there are no effective communication systems in hamlets and communes, which are home to large shares of potential participants. In addition, current laws don’t stipulate a dedicated fund to develop branches and consultants, which could popularise voluntary social insurance.”

At the same time, commercial insurance companies have successfully built up a dense network of promoters, dominating rural areas. High commissions were the main motivation for such promoters to actively persuade locals into buying commercial insurance policies.

Do Thi Chieu, head of the women’s union in Lien Ha commune, Ha Noi’s Dong Anh district, said that in her commune there were only 20 people participating in voluntary social insurance, while hundreds of others had already purchased commercial insurance.

Lien Ha is a trade village, home to hectares of vegetables that create jobs for 2,000 people with an average monthly income of VND1 million (US$52). It should have been a potential market for voluntary social insurance.

“To many people in my community, the requirement to pay for the past 20 years to be entitled to a pension is difficult to follow. Meanwhile, commercial insurance companies are offering various package options with flexible payout periods, ranging from five to 60 years,” Chieu said.

While voluntary social insurance only covered old-age pensions and survivor benefits, commercial insurance packages provided protection for a wide range of scenarios, including accident and sickness benefits. Chieu said that was why commercial insurance had become so popular.

VNSIA’s Khuong said that according to the Social Insurance Law, voluntary social insurance was only allowed to cover certain cases. In cases where insured persons sought sickness benefits, they could buy health insurance cards.

Nguyen Thi Tho, a Prudential customer, said, “I prefer an all-in package because when I am sick, I can receive financial support which, though small, makes me feel cared about.”

Khuong emphasised that the main strength of voluntary social insurance was that its formula to calculate pensions included a Custom Index Price, which protected the insured persons from inflation, while many commercial insurance packages only paid back lump sums at a fixed value agreed upon the time of signing.

Pham Thanh Binh, one of the earliest participants of voluntary social insurance (since August 2008), said, “Such long-term benefits can’t be seen without consultation from staff members. In addition, many people prefer receiving a lump sums rather than monthly pensions.”

Even in big cities like Ha Noi, Hai Duong and Hai Phong, people haven’t been taken in by the programme.

According to Do Thi Nguyet Nga, head of the Social Insurance Agency of Dong Anh district, several officials in communes, wards and districts who used to be covered by compulsory social insurance, were now, under new regulations, no longer eligible to receive these benefits. Those people wished to participate in voluntary social insurance so that they could have old-age pensions, but there had been no guidance to aggregate the contributions that they had already paid.

Khuong said that the Viet Nam Social Insurance Agency had reported the situation to relevant agencies to find out a solution that could protect the rights of the insured. In addition, the agency had submitted a request to the Ministry of Labour, Invalids and Social Affairs to establish a fund to build up and operate branches in communes and wards so that locals would have easier access to voluntary social insurance, and gradually become a part of it.

VietNamNet/Viet Nam News