Decision No. 04/2011/QD-TTg On Financial Management for the Vietnam Social Security

Pursuant to …;

On financial management for the Vietnam Social Security

 ________________________

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Law on Thrift and Combating Wastefulness dated November 29, 2005;

Pursuant to the Social Insurance Law dated June 29, 2006;

Pursuant to the Health Insurance Law dated November 14, 2008;

Based on Decree No. 94/2008/NĐ-CP dated August 22, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Vietnam Social Security;

Considering the proposal of the Minister of Finance,

DECISION:

Article 1. Scope of Regulation

This Decision regulates financial management for the Vietnam Social Security.

Article 2. Objectives and Requirements

1. To effectively perform the function of organizing the implementation of mandatory social insurance, voluntary social insurance, unemployment insurance, health insurance regimes and policies; organizing the collection, expenditure, management, and utilization of funds: mandatory social insurance, voluntary social insurance, unemployment insurance, health insurance in accordance with the law.

2. To innovate the financial management mechanism and staffing for the activities of the Vietnam Social Security to enhance efficiency and quality of work; practice thrift and combat waste to create conditions for investment and development; increase income, improve the living standards of officials, civil servants, and employees; and link responsibility with the interests of officials, civil servants, and employees in business operations.

3. To grant autonomy and accountability to the heads of units in the use of assigned staffing and management funding; promote the reorganization and streamlining of the organizational structure to enhance efficiency in performing assigned tasks.

4. To implement financial transparency in accordance with the law.

Article 3. Financial Sources

1. The financial sources managed by the Vietnam Social Security include:

a) Mandatory social insurance fund, including state budget sources guaranteed to pay pensions and social insurance benefits to those receiving pensions and social insurance benefits before January 1, 1995; military personnel directly participating in the anti-US war to save the country from April 30, 1975 or earlier, who have served at least 20 years in the military and have been discharged or retired; those who have worked for at least 15 but less than 20 years and have exhausted their entitlement to disability allowances, and other groups as prescribed.

b) Voluntary social insurance fund;

c) The unemployment insurance fund;

c) Health insurance fund;

d) Other financial sources as prescribed by law.

2. The Vietnam Social Security system shall open deposit accounts at the State Treasury and State Commercial Banks. The balance in these deposit accounts shall earn interest rates as prescribed by the State Treasury and State Commercial Banks.

Article 4. Financial Plan

1. Annually, along with the time specified for preparing the state budget estimate, the Vietnam Social Security shall prepare a financial plan, including the revenue and expenditure plan for the Social Security under the Ministry of National Defense, the Ministry of Public Security, the Office of the Government Communication Service, and the Ministry of Labor, Invalids, and Social Affairs, to be submitted to the Management Council of the Vietnam Social Security for approval and reported to the Ministry of Finance, the Ministry of Labor, Invalids, and Social Affairs, and the Ministry of Health, including:

a) Revenue and expenditure of mandatory social insurance;

b) Revenue and expenditure of voluntary social insurance;

c) Unemployment insurance revenue and expenditure;

c) Revenue and expenditure of health insurance;

d) Investment plan to preserve and grow the social insurance funds as stipulated in Article 7 of this Decision;

e) Administrative expenses as stipulated in Clause 1, Article 9 of this Decision;

f) Development investment expenses as stipulated in Article 10 of this Decision.

The Ministry of Finance shall take the lead and coordinate with the Ministry of Labor, Invalids, and Social Affairs, and the Ministry of Health to examine and consolidate the plan for submission to the Prime Minister for decision on allocating the financial plan to the Vietnam Social Security.

2. Based on the financial plan allocated by the Prime Minister, the General Director of the Vietnam Social Security shall decide to allocate revenue and expenditure budgets to subordinate units, provincial social security agencies, social security under the Ministry of National Defense, the Ministry of Public Security, the Office of the Government Communication Service, and the Ministry of Labor, Invalids, and Social Affairs.

3. When the state issues policies or systems that increase or decrease revenues and expenditures compared to the financial plan targets allocated to the Vietnam Social Security, the Ministry of Finance shall consolidate and submit to the Prime Minister for adjustment as appropriate.

Article 5. Management, use, and financial settlement

1. The mandatory social insurance fund, voluntary social insurance fund, unemployment insurance fund, and health insurance fund shall be managed and used in accordance with the provisions of the Social Insurance Law, Health Insurance Law, and guiding documents; they shall be independently accounted for and balanced in income and expenditure on a fund-by-fund basis.

2. The Vietnam Social Security shall organize the implementation of accounting, statistics work in compliance with the laws on accounting and statistics and information reporting systems as prescribed in the Social Insurance Law and Decree No. 94/2008/NĐ-CP dated August 22, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Vietnam Social Security.

3. Units entrusted with budgeted income and expenditure from the mandatory social insurance fund, voluntary social insurance fund, unemployment insurance fund, and health insurance fund shall be responsible for preparing financial settlement reports in accordance with the prescribed regulations to submit to competent authorities for review and verification according to the prescribed procedures as follows:

a) Units under the Vietnam Social Security, district-level social security, and provincial-level social security shall prepare financial settlement reports and submit them to their superior units in accordance with the regulations of the Vietnam Social Security;

b) Social security under the Ministry of National Defense, Ministry of Public Security, State Cryptography Committee; and the Ministry of Labor, Invalids, and Social Affairs shall prepare annual financial settlement reports and submit them to the Vietnam Social Security;

c) The Vietnam Social Security shall review and verify annual financial settlements, notify the results of such reviews and verifications to subordinate units, provincial-level social security, social security under the Ministry of National Defense, Ministry of Public Security, State Cryptography Committee, and the Ministry of Labor, Invalids, and Social Affairs; consolidate and prepare annual financial settlement reports to be submitted to the Management Board of the Vietnam Social Security for approval, and send them to the Ministry of Finance, the Ministry of Labor, Invalids, and Social Affairs, and the Ministry of Health.

4. The Ministry of Finance shall audit annual financial settlements and notify the results of such audits to the Vietnam Social Security (for the part of state budget funds allocated to pay pensions and social insurance benefits to pensioners and beneficiaries before January 1, 1995; military personnel directly participating in the resistance war against the United States to save the country from April 30, 1975, who have served at least 20 years in the military and have been discharged, and those who have worked for at least 15 but less than 20 years and have exhausted entitlement to disability benefits and other eligible groups as prescribed); compile the situation of income and expenditure of insurance funds, management costs, and development investment costs of the Vietnam Social Security and report to the Prime Minister.

Article 6. Administrative Fees for Social Insurance Benefits and Unemployment Benefits

1. Level of administrative fees for payment:

a) The Vietnam Social Security shall implement the task of paying pensions and social insurance benefits to pensioners and beneficiaries before January 1, 1995; military personnel directly participating in the resistance war against the United States to save the country from April 30, 1975, who have served at least 20 years in the military and have been discharged, and other eligible groups from state budget funds, with the state providing administrative fees for payment equal to 0.78% of the total amount of payments for pensions and social insurance benefits as prescribed, and consolidating this amount into the financial settlement of pensions and social insurance benefits from state budget funds guaranteed;

b) Administrative fees for payment of pensions, social insurance benefits, and unemployment benefits for eligible groups covered by the mandatory social insurance fund, voluntary social insurance fund, and unemployment insurance fund shall be set at 0.78% of the total amount of payments for pensions, social insurance benefits, and unemployment benefits as prescribed and allocated within the budgeted management costs of the Vietnam Social Security.

After the annual financial settlement has been approved, if the administrative fees for payment extracted are higher or lower than the administrative fees allocated in the budgeted management costs assigned to the Vietnam Social Security, the Ministry of Finance shall compile and submit to the Prime Minister for adjustment in the budgeted management costs of the Vietnam Social Security for the following year.

2. The entire amount of funds extracted based on the level of administrative fees for payment prescribed in Clause 1 of this Article shall be used as follows:

a) Extract 2% to establish a contingency reserve fund for pension and social insurance benefit payments and unemployment benefit payments to cover shortfalls in payment due to objective reasons. The management and use of this contingency reserve fund shall be decided by the General Director of the Vietnam Social Security.

b) The remaining portion shall be used for the following purposes:

- Printing forms, pension withdrawal slips, and lists of recipients;

- Transfer fees for depositing money into individual bank accounts of recipients;

- Costs of issuing ATM cards for monthly pension recipients who request payment through ATM cards;

- Renting transportation means and security forces during the transportation of money to payment points in communes, wards, and towns; renting payment locations and security forces on payment days in communes, wards, and towns;

- Purchasing safes, cash counters, and money packaging materials for organizations and individuals acting as agents for payment in communes, wards, and towns;

- Payment for services rendered by organizations and individuals acting as agents for direct payment of pensions, social insurance benefits, and unemployment benefits to recipients and managing recipients in the area;

- Rewards for organizations and individuals acting as agents who perform well in the payment of pensions, social insurance benefits, and unemployment benefits.

- Other expenses as prescribed by competent authorities.

3. The Ministry of Finance shall guide the management and use of administrative fees for payment prescribed in this Article to ensure that they are used for the intended purpose, for the correct recipients, and in a transparent manner.

Article 7. Investment activities from insurance funds

1. The Vietnam Social Security shall be responsible for balancing capital sources to implement measures for the preservation and growth of insurance funds, which shall be submitted to the Management Council of the Vietnam Social Security for approval.

2. The Management Council of the Vietnam Social Security shall decide on investment activities in the following forms:

a) Purchasing government bonds, promissory notes, treasury bills issued by the State, state-owned commercial banks;

b) Lending to the state budget, state-owned commercial banks, the Vietnam Development Bank, and the Social Policy Bank. The lending activities of the Vietnam Social Security shall be carried out in accordance with the provisions of Article 8 of this Decision;

c) Investing in national key economic programs and certain projects with significant capital needs as decided by the Prime Minister;

d) Other investment forms as decided by the Management Council of the Vietnam Social Security.

Priority shall be given to investments in the form of purchasing government bonds, promissory notes, treasury bills and lending to the state budget.

3. The entire amount of annual net income generated from investment activities from insurance funds shall be used as follows:

a) Allocating 2% to establish a risk reserve fund to address and compensate for risks due to external factors in investment activities. The use of this fund shall be decided by the Management Council of the Vietnam Social Security;

b) The remaining amount shall be allocated to insurance funds according to the average surplus capital ratio of each respective fund and used as follows:

- Net income from investment activities from the mandatory social insurance fund, after deducting costs as stipulated in point a, Clause 1, Article 11 of this Decision, the remainder shall be supplemented into the mandatory social insurance fund;

- Net income from investment activities from the voluntary social insurance fund, after deducting costs as stipulated in point b, Clause 1, Article 11 of this Decision, the remainder shall be supplemented into the voluntary social insurance fund;

- Net income from investment activities from the unemployment insurance fund shall be supplemented into the unemployment insurance fund;

- Net income from investment activities from the health insurance fund shall be supplemented into the health insurance fund's contingency reserve for medical examination and treatment.

4. Based on the annual socio-economic development situation and the investment forms prescribed in Clause 2 of this Article, the General Director of the Vietnam Social Security shall develop an investment plan to submit to the Management Council for approval.

Article 8. Lending activities of the Vietnam Social Security

1. Lending to the state budget:

a) The loan amount shall be decided by the General Director of the Vietnam Social Security based on the state budget's capital needs and the approved annual investment plan by the Management Council;

b) The loan term shall be calculated from the date of lending to the date of repayment; the specific loan term of each loan agreement shall be agreed upon between the Vietnam Social Security and the Ministry of Finance but shall not exceed 10 years;

c) The interest rate on loans shall be equal to the interest rate of government bonds with the same maturity period at the time of lending. In cases where there is no auction or guarantee for issuing government bonds with the same maturity period at the time of lending, the interest rate shall be decided by the Chairman of the Management Council of the Vietnam Social Security;

d) Debt recovery: principal payment in one lump sum when due; interest payments annually; the interest payment date shall be the anniversary date counted from when the Ministry of Finance receives the loan funds.

2. Lending to state-owned commercial banks, the Vietnam Development Bank, and the Social Policy Bank (hereinafter referred to as the borrower):

a) The loan amount shall be decided by the General Director of the Vietnam Social Security based on the borrower's capital needs, repayment capacity, and the approved annual investment plan by the Management Council;

b) The loan term shall be calculated from the date of lending to the date of repayment; the specific loan term of each loan agreement shall be agreed upon between the Vietnam Social Security and the borrower but shall not exceed 5 years;

c) The interest rate on loans shall be agreed upon by both parties but shall not be lower than the average deposit rate of the same maturity period of four trading branches or branches in Hanoi under four state-owned commercial banks at the time of lending. During the implementation of the loan agreement, if the average deposit rate of the same maturity period mentioned above fluctuates by more than 30% compared to the current effective loan interest rate, the Vietnam Social Security and the borrower may adjust the loan interest rate accordingly to ensure the rights of both parties.

If the Vietnam Social Security lends at an interest rate higher than the highest deposit rate of the same maturity period of four trading branches or branches of state-owned commercial banks in Hanoi at the time of lending, the interest income from the higher interest rate portion shall be used as follows:

- Allocating 50% to supplement the management budget and used to supplement the reward and welfare fund of the Vietnam Social Security industry, in addition to the allocation as stipulated in point b, Clause 3, Article 9 of this Decision.

- The remaining amount shall be used as prescribed in Clause 3, Article 7 of this Decision.

d) Debt recovery: principal payment in one lump sum when due, interest payments monthly. Upon the due date for interest payment, if the borrower fails to pay or pays insufficiently according to regulations, in addition to paying the full outstanding interest, they must also pay interest on the overdue interest at the late interest rate stipulated in Clause 3 of this Article corresponding to the overdue period;

đ) During the implementation of the loan agreement, the borrower has the right to repay the principal ahead of schedule, but must pay all interest for the remaining loan term of the loan agreement corresponding to the amount of principal repaid early and the interest rate applicable at the time of early repayment;

e) Upon the due date for principal repayment, if the borrower requests an extension or new loan, they must submit a written request to the Vietnam Social Security for consideration. Based on the borrower's request, the Vietnam Social Security may consider extending the debt once for a maximum of six months or granting a new loan; the procedures for the new loan shall be the same as for the initial loan.

3. The late interest rate for borrowers of the Vietnam Social Security shall be 150% of the loan interest rate at the time of the due date for repayment.

4. The lending activities as prescribed in this Article must be established in a contract. The Ministry of Finance shall stipulate the procedures for lending, the contents, and the model of the loan contract.

Article 9. Administrative management costs

1. The annual administrative management cost level of the Vietnam Social Security is determined as follows:

a) Salary, wages, allowances, and contributions made according to salary shall be implemented in accordance with the regulations set by the State.

b) Administrative management costs are determined based on the staffing quota assigned by the competent state agency and the standard allocation of the regular budget expenditure forecast as prescribed by the Prime Minister;

c) Special regular expenses and non-regular expenses, including the portion ensuring special regular expenses and non-regular expenses for social insurance, unemployment insurance, and health insurance activities of the Ministry of National Defense, Ministry of Public Security, Office of the Government’s Communication Service, and unemployment insurance activities of the Ministry of Labor, Invalids and Social Affairs, are determined based on the assigned tasks and the expense levels according to the prescribed regulations.

2. Contents of expenditure:

a) Administrative management costs: implemented in accordance with the current regulations of the Prime Minister regarding the issuance of standards for allocating regular budget expenditure forecasts;

b) Special regular expenses include:

- Costs for collecting social insurance, unemployment insurance, and health insurance; fees paid to organizations and individuals acting as agents to collect voluntary social insurance and health insurance at communes, wards, towns, and educational institutions under the national education system;

- Costs for disbursing social insurance, unemployment insurance, and health insurance;

- Costs for social insurance record books and health insurance cards;

- Printing and purchasing forms, vouchers, and reports for professional use;

- Costs for promoting social insurance, unemployment insurance, and health insurance;

- Transportation and money security costs;

- Money transfer fees;

- Fees for paying pensions and social insurance benefits, unemployment benefits;

- Costs for the operations of the Vietnam Social Security Management Board;

- Other expenses as prescribed by the competent authority.

c) Non-regular expenses include: car purchase costs, equipment and work tool procurement costs; retraining and vocational training costs for staff; scientific research costs; other costs as prescribed by law.

3. It is encouraged that the Vietnam Social Security arrange labor, streamline staffing, and save funds on the basis of ensuring the completion of assigned tasks. Within the allocated administrative management budget and other funding sources used as prescribed, the Vietnam Social Security implements measures to save funds, and the saved funds are used as follows:

a) To supplement income for officials, civil servants, and employees: the Vietnam Social Security may apply an additional fund for the maximum wage scale up to 1.0 times the wage grade, rank, and position level prescribed by the State;

b) To establish a reward and welfare fund up to three months' worth of salary, wages, and actual income realized in the year for regular or extraordinary rewards to individuals and groups within the unit; rewards for individuals and units outside the social insurance sector who have contributed to the sector's activities; collective welfare expenses;

c) To establish a fund for stabilizing income to ensure stable income for officials, civil servants, and employees due to objective reasons reducing income; support officials, civil servants, and employees in the social insurance sector facing difficult circumstances, suffering from serious illnesses, or other special cases;

d) To establish a fund for developing public service activities to supplement investment capital for constructing facilities, purchasing equipment and work tools, applying scientific and technological progress, and providing additional training and instruction to enhance the working capacity of officials, civil servants, and employees in the social insurance sector;

đ) To provide additional assistance beyond the general policy for employees in the self-funded establishment who voluntarily retire during the process of labor organization and restructuring; to support subordinate public service units of the Vietnam Social Security;

e) Any remaining savings at the end of the year not yet used can be carried over to the next year for continued use.

4. If the Vietnam Social Security achieves excess revenue compared to the plan assigned by the Prime Minister (after excluding objective factors increasing revenue) during the implementation year, the budget for management costs will be supplemented to ensure corresponding actual increases in management costs for the increased number of participants compared to the initial plan assigned by the competent authority at the beginning of the year. The Ministry of Finance shall review the annual increase in management costs and submit it to the Prime Minister for decision to allocate additional budget to the Vietnam Social Security.

5. The General Director of the Vietnam Social Security is responsible for establishing and issuing standards and expenditure systems suitable for the sector's activities based on applying state-prescribed standards and within the allocated financial scope; deciding on the use of the savings as prescribed in Clause 3 of this Article to make them public and implement them throughout the sector.

6. The Ministry of Finance shall detail the content of expenditures as prescribed in Clause 2 of this Article; guide the preparation of budgets, allocation of budgets, management, use, and settlement of funds suitable for the organizational activities of the Vietnam Social Security, social insurance under the Ministry of National Defense, Ministry of Public Security, Office of the Government’s Communication Service, and units under the Ministry of Labor, Invalids and Social Affairs.

Article 10. Investment Development Expenditure

1. The annual investment development expenditure level of the Vietnam Social Security shall be determined based on approved investment projects and information technology development projects by the competent authority.

2. Contents of expenditure include:

a) Construction investment for office premises and transaction facilities;

b) Development and modernization of information technology;

c) Purchase of fixed assets and upgrading of infrastructure.

3. Management and utilization of investment development funds of the Vietnam Social Security shall comply with the current regulations on management of basic construction capital in accordance with the specific nature of the industry's capital.

Article 11. Sources of Administrative Management Costs and Investment Development Expenditure

1. Administrative management costs and investment development expenditure allocated to the Vietnam Social Security annually shall be sourced from the following:

a) Profits from compulsory social insurance fund investment activities;

b) Profits from voluntary social insurance fund investment activities;

c) The unemployment insurance fund;

d) Health insurance fund.

2. Specific levels of allocation from the sources specified in Clause 1 of this Article shall be decided by the General Director of the Vietnam Social Security.

Article 12. Other Sources of Funds

1. In addition to the budgeted administrative management costs and investment development expenditure assigned according to Articles 9 and 10 of this Decision, the Vietnam Social Security shall also utilize the following funds annually:

a) Interest generated on accounts opened at the State Treasury and State Commercial Banks for administrative management costs;

b) State budget support for tasks assigned by authorized state agencies;

c) Support from domestic and foreign organizations and individuals;

d) Other lawful revenues (if any).

2. Management and utilization of the funds specified in Clause 1 of this Article shall be decided by the General Director of the Vietnam Social Security.

Article 13. Utilization of Staff Positions and Labor

1. Annually, the Vietnam Social Security shall prepare staffing plans in accordance with regulations, submit them to the Ministry of Home Affairs for review, and then present them to the Prime Minister for approval. Based on the total staff positions assigned, the General Director of the Vietnam Social Security shall allocate staff positions to subordinate agencies and units.

2. In addition to the staff positions assigned by authorized state agencies, the Vietnam Social Security may decide to enter into service contracts or labor contracts in accordance with labor laws for tasks that do not require permanent staff positions, ensuring financial feasibility.

3. The Vietnam Social Security shall arrange, deploy, and utilize civil servants and public officials in accordance with assigned tasks, civil servant and public official ranks, and relevant laws on cadres and civil servants to enhance operational quality and efficiency.

Article 14. Effective Date

Article 14. Effective Date

1. This Decision shall take effect from March 10, 2011; provisions of this Decision shall be implemented from the 2011 fiscal year.

Article 15. Implementation Organization

2. Decree No. 41/2007/QĐ-TTg dated March 29, 2007 of the Government on financial management for the Vietnam Social Security is hereby repealed.

1. The Minister of Finance shall be responsible for guiding and supervising the implementation of this Decision.