Expanding Coverage in Vietnam’s Voluntary Social Insurance Scheme: Insights and Recommendations

Himanshi Jain, Nga Thi Nguyen, Agastya Yeachuri, Pham Bao Ha and Koustav De

No 197515, Social Protection Discussion Papers and Notes from The World Bank

Abstract: Vietnam has witnessed impressive economic growth in recent decades, but it continues to have a large share of its workers in the informal sector. The lack of a labor contract for workers in the informal economy excludes them from payroll financed mandatory social insurance (SI) coverage. Among lifecycle risks an individual faces, Vietnam has successfully extended health insurance coverage to those in the informal sector, but similar results have not been replicated for pensions and other short-term benefits. International experience on expanding pension coverage in voluntary schemes suggests that innovation in design, delivery, and incentives is still needed. Vietnam has set a bold target under Resolution 28, of attaining contributor coverage of 60 percent of the labor force and beneficiary coverage of 60 percent of older adults by 2030. The voluntary SI scheme (VSIF) introduced in the 2006 SI Law and implemented from January 1st, 2008, is targeted towards Vietnamese citizens aged 15 years or older who are not eligible to participate in compulsory SI. Expanding coverage in the voluntary scheme will require a multi-stakeholder strategy encompassing the effective use of fiscal incentives, innovation in program design, and strengthening administration as well as service delivery aspects. Section 1 of this report includes an overview of the voluntary pension scheme including institutional arrangements and recent legislative and administrative changes. Section 2 covers the results of the delivery chain assessment while section 3 includes findings of the voluntary scheme desirability survey (VSDS) of 900 individuals across three provinces carried out to understand respondents’ awareness and perception of the scheme and their preferences for alternate design options in the VSIF. Section 4 concludes with recommendations for improvement to design, delivery, and incentives in the scheme with the aim of informing the 2024 SI law revision and aiding the coverage expansion efforts.

Date: 2025-02-24
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