Circular No. 61/2005/TT-BTC guiding amendments and supplements to Circular No. 49/2003/TT-BTC dated May 16, 2003 of the Ministry of Finance on guiding the Financial Management Regulation for the Vietnam Social Security.

CIRCULAR

Guidelines for amending and supplementing Circular No. 49/2003/TT-BTC

dated May 16, 2003 of the Ministry of Finance on guiding the Financial Management Regulation for the Vietnam Social Security

Regulations on financial management for the Vietnam Social Security

The Minister of Finance issues this Circular regulating the preparation of budgets, management, use, and settlement of funds supported by the State budget for organizations assigned or authorized by the Ministry of Foreign Affairs to perform tasks of selecting, introducing, and managing Vietnamese workers working for foreign organizations and individuals in Vietnam.

Pursuant to Decree No. 63/2005/NĐ-CP dated May 16, 2005 of the Government on promulgating the Statutes of Health Insurance;

Pursuant to Decision No. 144/2005/QĐ-TTg dated June 14, 2005 of the Prime Minister on amending and supplementing some Articles of the Financial Management Regulation for the Vietnam Social Security issued together with Decision No. 02/2003/QĐ-TTg dated January 2, 2003 of the Prime Minister;

The Ministry of Finance supplements and amends Circular No. 49/2003/TT-BTC dated May 16, 2003 on guiding the Financial Management Regulation for the Vietnam Social Security as follows:

I. AMENDMENTS AND SUPPLEMENTS

1. Clause 1.3, Point 1, Section II, Part I is amended as follows:

"Annually, based on the social insurance expenditure budget approved by the Government, the Ministry of Finance shall notify the Vietnam Social Security to allocate and assign expenditure tasks to subordinate units. The allocation and assignment of the social insurance expenditure budget shall be carried out in accordance with the current regulations of the State."

2. Clause 3.4, Point 3, Section II, Part I is amended as follows:

"Funds from the central government budget allocated to the Social Insurance Fund must ensure compliance with policies and not exceed the annual budget assigned. After the Ministry of Finance announces the final settlement figures of the previous year, if there are remaining funds that have not been settled, they will be deducted from the allocation to the Social Insurance Fund for the following year; if the state budget funds allocated are less than the final settlement figures, they will be arranged in the budget of the immediately following year when the Ministry of Finance issues the approval for final settlement."

3. Point 2, Section I, Part II is amended as follows:

"2. The Compulsory Medical Examination and Treatment Fund is formed from the following sources:

2.1. Contributions to health insurance of compulsory participants working in production and business units, administrative agencies, public institutions, Party organizations, political and social organizations, and trade union organizations. The contribution rate is 3% of the total payroll, of which the employer contributes 2% and the employee contributes 1%.

2.2. Contributions to health insurance for incumbent representatives of People's Councils at all levels who are not part of the state civil service or do not enjoy monthly social insurance benefits. The contribution rate is 3% of the national minimum wage.

2.3. Contributions to health insurance for pensioners (including retired village, town, and township cadres), disability allowances. The contribution rate is 3% of the pension or allowance amount.

2.4. Contributions to health insurance for those injured in work accidents - occupational diseases; rubber plantation workers; individuals receiving allowances under Decision No. 91/2000/QĐ-TTg dated May 4, 2000 of the Prime Minister; revolutionary veterans; war veterans and their children affected by chemical warfare agents used by the United States during the Vietnam War who are currently receiving monthly allowances; retired village, town, and township cadres who are elderly and unable to work and are receiving monthly allowances under Decision No. 130/CP dated June 20, 1975 of the Council of Ministers and Decision No. 111/HĐBT dated October 13, 1981 of the Council of Ministers; dependents of military officers currently serving, dependents of civilian officers currently working in the Public Security force; social welfare beneficiaries currently receiving monthly allowances. The monthly contribution rate is 3% of the national minimum wage.

2.5. Contributions to health insurance for people aged 90 years and older and other elderly people as stipulated in Article 6 of Decree No. 30/2002/NĐ-CP dated March 26, 2002 of the Government on provisions and guidance for implementing certain articles of the Elderly People Ordinance; individuals eligible for medical examination and treatment under Decision No. 139/2002/QĐ-TTg dated October 15, 2002 of the Prime Minister on medical examination and treatment for the poor. The annual contribution is VND 50,000 per person.

2.6. Contributions to health insurance for foreign students studying in Vietnam. The contribution rate is 3% of the scholarship amount.

2.7. Interest from the investment activities of the Compulsory Medical Examination and Treatment Fund.

2.8. Support from domestic and international organizations and individuals.

2.9. Other amounts (if any).

The wages of employees serving as the basis for social insurance and health insurance contributions according to Clauses 1.1, 1.2, and 2.1 above include: grade, rank, insignia, position, contract, differential retention coefficient (if applicable); position allowances, seniority allowances exceeding the ceiling, regional allowances (if applicable). The total payroll for social insurance and health insurance contributions is the total amount of wages serving as the basis for social insurance and health insurance contributions of all employees in the unit required to participate in compulsory social insurance and health insurance contributions."

4. Point 2, Section III, Part II is amended as follows:

"2. The Compulsory Medical Examination and Treatment Fund is used to pay for medical examination and treatment costs for those holding cards or certificates for medical examination and treatment as prescribed by authorized agencies, including:

2.1. Medical examinations, diagnoses, treatments, and rehabilitation services during hospitalization at healthcare facilities.

2.2. Laboratory tests, imaging diagnostics, functional examinations.

2.3. Medicines listed in the Ministry of Health's directory.

2.4. Blood and fluid transfusions.

2.5. Surgical procedures and operations.

2.6. Use of medical supplies, equipment, and hospital beds.

2.7. Costs of prenatal care and childbirth.

2.8. Transportation costs for transferring patients to higher-level specialized hospitals as prescribed by the Ministry of Health for certain groups such as the poor, policy beneficiaries, and residents or workers in mountainous, remote, and far-flung areas."

5. PART II, SECTION IV is amended as follows:

"IV. OPERATING COSTS OF THE VIETNAM SOCIAL INSURANCE SYSTEM

1. The operating costs of the Vietnam Social Insurance System shall be derived from the profit generated from implementing measures to preserve and increase the growth of the Social Insurance Fund according to a percentage of the actual annual social insurance and health insurance revenue collected (from contributions made by employers and participants).

The operating costs mentioned above include major repair costs, fixed asset purchases, and research and development expenses, staff training and capacity building; excluding basic construction investment costs and information technology project implementation costs approved by competent authorities.

The annual operating cost extraction ratio is 3.6%, stable for three years from 2005 to 2007.

Example:

In 2005, the total actual revenue of the Social Insurance and Health Insurance Funds was 18.4 trillion VND, including:

- Revenue from contributions by employers, employees, and management agencies for insured objects was 16.4 trillion VND;

- Profit from investment activities, financial support, and other income (if any) was 2 trillion VND.

The operating costs of the Vietnam Social Insurance System extracted in 2005 were:

3.6% x 16.4 trillion VND = 590.4 billion VND

2. From July 1, 2005, the operating costs extracted according to the provisions above shall be used for the purposes detailed in the attached appendix to this Circular.

3. Based on state-set standards and within the allocated budget, the Vietnam Social Insurance shall establish appropriate expenditure standards suitable for its industry, submit them to the Vietnam Social Insurance Management Council for approval, and implement them publicly throughout the sector.

4. According to the social insurance and health insurance collection plan and expenditure standards, the Vietnam Social Insurance shall prepare an operating budget corresponding to the extracted funds based on the collection plan and submit it to the Vietnam Social Insurance Management Council for approval. After approval, the operating budget will be sent to the Ministry of Finance for monitoring and inspection.

The Vietnam Social Insurance may temporarily withdraw from the Social Insurance Fund to provide operating funds to units. At year-end, based on the actual social insurance and health insurance revenue of the entire sector, the total amount of operating costs extracted for the entire sector will be determined; simultaneously, the Vietnam Social Insurance will use the profit from investment activities during the year to repay the operating costs temporarily withdrawn from the Social Insurance Fund.

During implementation, if the revenue does not meet the initial budget, the Vietnam Social Insurance will manage the system to reduce expenditures accordingly; if reductions cannot be made in the current year, the budget for the following year will be reduced.

5. From July 1, 2005, within the allocated operating budget, the Vietnam Social Insurance may prepare a total salary budget for the entire sector up to 2.0 times the state-prescribed salary regulations for civil servants and public officials (as stipulated in Government Decree No. 204/2004/ND-CP dated December 14, 2004 on salary regulations for civil servants, public officials, and armed forces personnel) and the current wage regulations for contractual workers.

Within the aforementioned total salary budget, the Vietnam Social Insurance may determine the salary levels for civil servants and public officials throughout the sector. The Vietnam Social Insurance is responsible for establishing a salary distribution policy throughout the sector, linking salaries with work performance results and quality, ensuring fairness and reasonableness.

6. If the Vietnam Social Insurance completes the assigned plan, increases revenue, and reduces operating costs, the surplus funds (the amount extracted minus actual expenditures) shall be used for the following purposes:

6.1. Establishing a reward and welfare fund not exceeding three months' average actual salary of the entire sector.

6.2. Providing additional support beyond the general state policy for employees in the system when implementing labor adjustment policies and reducing staffing; establishing a reserve fund for stabilizing income.

The Vietnam Social Insurance Management Council shall approve the supplementary allowance regulations for employees who retire due to labor adjustments and staffing reductions and the reserve fund establishment level for the Vietnam Social Insurance to implement publicly throughout the sector.

6.3. The remaining portion after allocating funds for the above purposes shall be added to the Social Insurance Funds.

7. The state manages the staffing of civil servants in the Vietnam Social Insurance System's management framework. The Vietnam Social Insurance may proactively organize and enter into labor contracts in accordance with the Labor Code to meet job requirements.

8. Contributions and benefits under social insurance and health insurance schemes for civil servants and public officials in the Vietnam Social Insurance Sector shall be calculated based on the salary coefficient prescribed in Government Decree No. 204/2004/ND-CP dated December 14, 2004 on salary regulations for civil servants, public officials, and armed forces personnel, or the salary recorded in the labor contract for non-state-salary-scale contractual workers."

6. Point 4, Section V, Part II is amended as follows:

"4. From July 1, 2005, the profit generated from implementing measures to preserve and increase the Social Insurance Fund (which includes all interest income generated) shall be used as follows:

4.1. Extract operating costs of the Vietnam Social Insurance System as prescribed.

4.2. Allocate capital for basic construction projects; implement information technology projects according to approved plans and annual implementation schedules.

4.3. The remainder shall be added to the Social Insurance Funds to preserve and increase their value.

II. IMPLEMENTATION PROVISIONS

1. This Circular takes effect 15 days after its publication in the Official Gazette; all previous regulations that conflict with the provisions of this Circular cease to be effective.

2. The Vietnam Social Security shall guide social insurance agencies at all levels to implement correctly the contents prescribed in this Circular. During the implementation process, if there are any difficulties, they are requested to reflect them to the Ministry of Finance for consideration and resolution./.