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Vietnam Today

Push for digital payment of social security

Released at: 08:29, 05/06/2019

Push for digital payment of social security

Photo: Viet Nam Social Insurance

Only 20% of pensions are paid into bank accounts, Hanoi seminar hears.

by Jessica Nguyen

Vietnam’s social security system in recent years has improved but is still inferior to typical middle-income countries, Ms. Keiko Inoue, Coordinator of the Human Development Program, Gender and Employment, at the World Bank (WB), told the “Strengthening Social Security Governance and Payment System: Current Assessment, International Experience, and Implications for Vietnam” seminar organized on June 3 in Hanoi by the Ministry of Labor and Social Affairs (MoLISA) in cooperation with the WB. “Vietnam needs to work hard to expand digital payments for social security distribution, providing reliable, cost-effective and accessible services for those who enjoy this regime,” she said.

Data presented by a representative from MoLISA showed that Vietnam Social Insurance (VSI) is currently paying social insurance to more than 3.1 million people, and millions of others enjoy one-time social insurance and coverage of burial, sickness, maternity, and convalescence expenses. Payment methods are conducted in many flexible forms, such as direct payment, via a bank, and via a post office. VSI has also built up a payment process for paying social insurance, health insurance, and unemployment insurance in a synchronous manner through electronic transactions. However, the number of people receiving pensions and monthly social insurance benefits through bank accounts is extremely low, as nearly 80 per cent of pensions and 100 per cent of social benefits are paid in cash.

According to Mr. Pham Thanh Du, Deputy Director of the Department of Accounting and Finance at VSI, Vietnamese people are still in the habit of using cash and payments via banks are not common. Only some 21 per cent of all payments are made via a bank account. Distribution rates between cities and provinces are uneven and mainly in major cities. The use of bank accounts and cards is difficult for the elderly and sick, especially those living in remote areas where there are very few ATMs.

“Under a resolution from the government, receiving social insurance payments through bank accounts is preferred but not mandatory,” Mr. Du said. “The implementation of the digitalization plan in social insurance payments is a positive step but faces many difficulties, especially for pensioners. Retirees wish to receive cash, as they are not comfortable using ATM machines.”

Ms. Inoue said that to overcome inadequacies in infrastructure in rural areas and remote areas, agents should be allowed to operate under the banking model and to develop electronic payment methods. The experience of similar countries show that such services have proven effective in providing low-cost digital payment services to beneficiaries, but a favorable legal environment is needed to succeed.

VSI will study and develop a roadmap to standardize data on pensioners and social insurance allowances to connect and share information with payment service providers in order to pay pensions and social insurance benefits through banks according to the assigned plan. It will also encourage recipients of pensions and social insurance benefits to use non-cash payments.

According to VSI’s goal, by 2020, Vietnam will have 20 per cent of social security payments made through banks. By 2021, the electronic transaction rate will reach 100 per cent, reducing the time needed for transactions between social insurance agencies and businesses and with a satisfaction rate of 80 per cent among participants in social insurance. In the 2025-2030 period, the satisfaction rate is to reach 85-90 per cent.

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