Circular No. 85/1998/TT-BTC guides the Financial Management Regulations for the Vietnam Social Security.

CIRCULAR

Guidelines for Financial Management Regulations for Vietnam Social Insurance

Implementing Decision No. 20/1998/QĐ-TTg dated January 26, 1998 of the Prime Minister on the financial management regulations for Vietnam Social Insurance. After reaching consensus with Vietnam Social Insurance and the Ministry of Labor, Invalids and Social Affairs, the Ministry of Finance provides specific guidelines as follows:

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1. The Ministry of Finance allocates sufficient funds to pay monthly to beneficiaries receiving social insurance before January 1, 1995. These funds are managed according to the provisions of the State Budget Law and implemented through accounting records and settlement procedures in accordance with the social insurance accounting system issued by the Ministry of Finance.

2. Social insurance agencies at all levels are responsible for organizing the timely and full payment of social insurance benefits in accordance with state policies and regulations for beneficiaries.

3. The social insurance fund is centrally and uniformly managed throughout the social insurance system, operates independently, and is protected by the state.

4. The social insurance fund is formed from contributions by workers and employers, budgetary support from the state budget, and interest from activities aimed at preserving and increasing the fund's value and other revenues. The fund is used to pay social insurance benefits to beneficiaries starting from January 1, 1995; to cover administrative costs of the social insurance system; to finance activities aimed at preserving and increasing the fund's value; and for other expenditures.

5. The social insurance system opens deposit accounts for the social insurance fund at the State Treasury System and dedicated collection accounts for social insurance premiums at the State Commercial Bank System. The balance in all deposit accounts of the social insurance system at commercial banks and treasuries shall earn interest at the rate applicable to non-term deposits as stipulated by the State Commercial Banks.

PART II - MANAGEMENT OF FUNDS PROVIDED BY THE STATE BUDGET FOR SOCIAL INSURANCE PAYMENTS
THE STATE BUDGET ALLOWS EXPENSES FOR SOCIAL INSURANCE

I - CONTENTS OF SOCIAL INSURANCE PAYMENTS FUNDED BY THE STATE BUDGET:

The Ministry of Finance allocates sufficient funds to pay monthly to beneficiaries receiving social insurance before January 1, 1995, in accordance with the contents specified in Article 11 of Decision No. 20/1998/QĐ-TTg dated January 26, 1998 of the Prime Minister:

1. Monthly recurring expenses:

Pension.

Disability allowance. - Rubber worker disability allowance.

Allowance for work-related accidents and care for accident victims.

Occupational disease allowance.

Survivor's benefit (basic rate and maintenance).

2. One-time allowances: Funeral expenses, survivor's benefit.

3. Health insurance premium payments.

4. Provision of rehabilitation equipment for accident victims.

5. Payment fees.

6. Other expenses (if any).

II - PREPARATION, REVIEW, ALLOCATION, AND SETTLEMENT OF FUNDS FOR SOCIAL INSURANCE PAYMENTS:
EXPENSES FOR SOCIAL INSURANCE:

The preparation, review, allocation, and settlement of social insurance expenditure budgets by the Vietnam Social Insurance System must comply not only with the detailed guidance provided in Circular No. 09 TC/NSNN dated March 18, 1997 of the Ministry of Finance on the implementation of the decentralization, preparation, execution, and settlement of the state budget but also with the following specific tasks:

1. Preparation and review of the budget estimate:

1.1. The budget estimate for social insurance for beneficiaries before January 1, 1995 must fully reflect the content of each expense item listed in Part II, Section I above, categorized by type of beneficiary and current benefit level. The budget estimate must be accompanied by a description of the number of current beneficiaries, projected increases and decreases, and other expenditure needs for the quarter and year.

1.2. The budget estimate is prepared and reviewed at three levels: central, provincial, and district:

The budget estimate for social insurance at the district level (hereinafter referred to as district) is guided by the provincial social insurance agency in its preparation and review. Three copies of the budget estimate are created: one copy sent to the district treasury for cash flow balancing and expenditure control; one copy sent to the provincial social insurance agency for consolidation and notification of the budget estimate; and one copy retained at the district social insurance agency.

The budget estimate for social insurance at the provincial level (hereinafter referred to as province) is guided by the Vietnam Social Insurance in its preparation and review. The provincial social insurance budget estimate must be consolidated based on the approved budget estimates of the district social insurance agencies. Four copies of the budget estimate are created: one copy sent to the Vietnam Social Insurance for consolidation and notification of the budget estimate; one copy sent to the provincial treasury for cash flow balancing and expenditure control; one copy sent to the Ministry of Finance for monitoring changes in the number of beneficiaries and social insurance benefit levels funded by the state budget; and one copy retained at the provincial social insurance agency.

The budget estimate for the Vietnam Social Insurance must be consolidated based on the budget estimates of the provincial social insurance agencies and reviewed and approved by the Vietnam Social Insurance Management Council. Three copies of the budget estimate are created: one copy sent to the Central Treasury, one copy sent to the Ministry of Finance, and one copy retained at the unit.

After receiving the budget estimate for the Vietnam Social Insurance, the Ministry of Finance reviews, consolidates, and submits it to the Government and National Assembly for approval.

2. Allocation of approved budget estimates to units:

2.1. Annually, based on the approved social insurance expenditure budget by the Government and National Assembly, the Ministry of Finance notifies the Vietnam Social Insurance to notify the provincial social insurance agencies and the provincial social insurance agencies to notify the district social insurance agencies of the budget estimate within the prescribed time frame and in accordance with the current budget classification.

2.2. The allocation must ensure that the total funds allocated to lower-level budget units do not exceed the total funds approved by the Government and National Assembly and notified by the Ministry of Finance, specifically:

The Vietnam Social Insurance allocates and notifies the funds to the provincial social insurance agencies. The allocation notification must be sent to the Ministry of Finance and the Central Treasury as the basis for fund disbursement and expenditure control.

The provincial social insurance agency allocates and notifies the funds to the district social insurance agencies. The budget estimate notification must be sent to the provincial treasury and district treasury as the basis for fund disbursement and expenditure control.

3. Fund disbursement and settlement:

3.1. Funding: The financial resources for payments to beneficiaries entitled to social insurance benefits before January 1, 1995 shall be provided by the Ministry of Finance to the Vietnam Social Security on a quarterly basis and shall be issued before the 25th day of the last month of each quarter for the next quarter's funds, and recorded according to the current State budget classification. The Central Treasury shall cooperate with the Vietnam Social Security to guide provincial and district social security agencies in opening accounts for accounting and tracking these funding sources separately.

In cases where the State budget is difficult, the Vietnam Social Security may temporarily borrow from the idle funds of the Social Insurance Fund to make timely payments to beneficiaries and repay the temporary borrowing immediately upon receipt of the State budget funding.

3.2. Settlement of funds:

a) Preparation and submission of settlement reports:

District Social Security shall prepare and submit settlement reports to the Provincial Social Security in accordance with the current regulations of the State.

Provincial Social Security shall prepare the provincial settlement report (based on the consolidated settlement reports of district social security agencies and expenditures at the provincial social security agency) to send to the Vietnam Social Security while simultaneously sending one copy to the Ministry of Finance.

The Vietnam Social Security shall prepare the nationwide settlement report (based on the consolidated settlement reports of provincial and city social security agencies) to send to the Ministry of Finance.

The time for preparing and submitting quarterly and annual settlement reports shall be in accordance with the current regulations of the State. Units that fail to submit reports within the prescribed deadline will have their funding suspended until the reports are received.

b) Approval of settlement reports:

Quarterly settlement reports of district social security agencies shall be reviewed by the provincial social security agency in accordance with the State's regulations and guidelines of the Vietnam Social Security.

Quarterly settlement reports of provincial social security agencies shall be approved by the Vietnam Social Security and notified in accordance with the current regulations of the State. For annual settlement reports, the Vietnam Social Security shall take the lead in reviewing and notifying the review schedule for the Ministry of Finance to participate in coordination.

The total annual settlement report of the Vietnam Social Security shall be audited, reviewed, and notified by the Ministry of Finance for consolidation into the State Budget Settlement Report to be submitted to the Government for approval.

PART III - MANAGEMENT OF THE SOCIAL INSURANCE FUND

I. SOURCES OF THE SOCIAL INSURANCE FUND:

1. The social insurance fund is formed from the following sources:

Contributions from employers amounting to 15% of the total payroll.

Contributions from employees amounting to 5% of their salary.

Contributions and support from the State budget.

Income from the implementation of activities to preserve and increase the social insurance fund.

Revenue from donations and grants from organizations and individuals both domestically and internationally.

Other revenues (if any)

2. Every 15 days, the Vietnam Social Security is responsible for transferring all collected social insurance revenue to the account of the social insurance fund opened at the Treasury system.

3. Social security agencies at all levels are responsible for guiding and organizing the collection of social insurance contributions from all participating subjects in accordance with the prescribed periods and amounts. Each month, employing units (including units, agencies, and organizations under the Ministry of National Defense, the Ministry of Public Security, and the General Office for Administrative Affairs) are responsible for making full and timely contributions to the social insurance fund immediately after paying monthly salaries to employees.

4. In cases where employing units delay social insurance contributions for 30 days or more beyond the due date, in addition to being subject to penalties as stipulated in Point 8, Article 11 of Decree No. 38/CP dated June 25, 1996 of the Government on administrative penalties for violations of labor laws, they must also pay late payment interest at the rate specified by the State Bank of Vietnam for overdue loans at the time of recovery. At the same time, social security agencies at all levels have the right to request the Treasury and banks to deduct money from the employing unit's account to pay social insurance contributions and late payment penalties (if applicable) without requiring the employing unit's consent for payment.

Employing units that intentionally violate the contribution deadlines shall have their social insurance benefit payments refused for all employees of such employing units; at the same time, social security agencies at all levels shall establish files to transfer to legal authorities for handling violations against the employing unit owners in accordance with the law.

II. PAYMENTS FOR SOCIAL INSURANCE BENEFITS:

The social insurance fund is used to pay beneficiaries entitled to social insurance benefits from January 1, 1995 onwards, including the following items:

1. Pension (regular and lump sum).

2. Allowances for workers injured in accidents and caregivers for injured workers, provision of equipment for injured workers.

3. Sickness allowance.

4. Maternity allowance.

5. Occupational disease allowance.

6. Survivor's benefits (basic and maintenance) and funeral expenses.

7. Health insurance purchase fees.

8. Payment fees.

9. Other expenses.

III. MANAGEMENT COSTS OF THE VIETNAM SOCIAL SECURITY SYSTEM:

1. From 1998 to 2002, the regular management costs of the Vietnam Social Security System shall be deducted from the social insurance fund, calculated at 6% of the actual annual social insurance revenue collected from employees and employers.

2. Annually, based on the approved social insurance revenue plan, the Vietnam Social Security shall be allowed to temporarily deduct from the social insurance fund to provide operating funds to units with operational expenses. The following year, based on the previous year's settlement data of social insurance revenue, the amount of management cost deduction for the previous year will be determined; if the deduction exceeds the allowable amount, it will be deducted from the next year's plan; if the deduction is insufficient, it will be supplemented to the next year's plan.

4. Investment costs for construction of physical infrastructure:

4.1. The funding for the construction and development of material infrastructure of the Vietnam Social Security System shall be balanced and allocated annually from the State Budget; additionally, from 1998 to 2002, fifty percent of the profits generated from investment activities shall be used to supplement the capital for constructing material infrastructure throughout the sector.

4.2. The Vietnam Social Security may only allocate and balance into its annual investment capital plan the profits from the previous year's investment growth fund activities. This capital shall not be used for other activities.

4.3. When implementing investments using funds allocated from the State Budget and profits, the Vietnam Social Security must comply with current regulations on investment management and construction by the State.

IV. ACTIVITIES FOR PRESERVING THE VALUE AND GROWTH OF THE SOCIAL INSURANCE FUND:
1. The Vietnam Social Security may use temporarily idle funds from the social insurance fund to implement measures for preserving value and growth. Investments using the social insurance fund must ensure safety, minimize risks to the lowest possible level, preserve value, and achieve economic and social effectiveness.

Idle funds from the social insurance fund shall be prioritized for loans to the State Budget to address necessary expenditure needs and shall be paid interest at the rate for non-term deposits as stipulated by the State Commercial Bank.

Purchase treasury bills, bonds, and promissory notes issued by the State Treasury and State Commercial Banks.

Provide loans to the National Investment Support Fund and State Commercial Banks.

Invest in certain state-owned projects and enterprises approved and supported by the Prime Minister.

2. Activities related to the preservation and growth of the social insurance fund must be accounted for and reported separately according to the accounting system for social insurance established by Decision No. 1124/TC/QĐ/CĐKT dated December 12, 1996, issued by the Minister of Finance.

3. The profit generated from implementing measures to preserve and grow the fund includes the total interest from loans, treasury bills, bonds, and other profitable activities as specified in Article 17 of Decision No. 20/1998/QĐ-TTg.

4. The profit obtained from activities to preserve and grow the fund shall be distributed as follows: From 1998 to 2002, fifty percent shall be used to supplement capital for the construction and development of material infrastructure throughout the sector.

Establish reward and welfare funds equal to three months' actual salary of the entire sector.

5. The General Director of the Vietnam Social Security shall submit to the Board of Directors for approval and issuance of regulations on the use of reward and welfare funds within the framework of current laws.

6. The Vietnam Social Security has the responsibility to report annually on the activities of preserving and growing the social insurance fund (including the balance of the social insurance fund, the amount being invested, the interest earned during the fiscal year, the use of profit, and the planned activities for preserving and growing the fund in the following year) to the Government and the Ministry of Finance.

V. RESPONSIBILITIES OF SOCIAL SECURITY AUTHORITIES AT ALL LEVELS IN MANAGING THE SOCIAL INSURANCE FUND:

1. The Vietnam Social Security:

1.1. The Vietnam Social Security is responsible for guiding subordinate social security agencies in preparing budgets, finalizing revenues and expenditures for social insurance, managing administrative costs, and fully and timely implementing social insurance benefits for participants.
1.2. Annually prepare the budget for social insurance revenue and expenditure, and administrative management costs for the entire sector, submit it to the Management Council for approval, and send it to the Ministry of Finance.

1.3. Annually, the Vietnam Social Security develops plans for preserving and growing the social insurance fund, submit them to the Management Council for approval, and send them to the Ministry of Finance for supervision of implementation. After approval by the Management Council, the Vietnam Social Security is responsible for implementing the plans and schedules. The General Director of the Vietnam Social Security is accountable to the Management Council for activities related to preserving and growing the fund. For projects that cannot be implemented according to schedule or plans, or newly arising projects, the General Director of the Vietnam Social Security must report to the Management Council for handling within their authority.

1.4. Approve and promptly notify the annual plan to provincial and centrally-administered city social security agencies in accordance with established standards, cost norms, and assigned tasks, ensuring that the budget allocation for social security agencies at all levels does not exceed the approved total budget estimate.

1.5. Organize unified management of social insurance revenue throughout the sector.

1.6. Allocate sufficient funds according to the approved budget to provincial and centrally-administered city social security agencies.

1.7. Implement expenditures, finalize accounts, and report quarterly and annually (including revenue and expenditure activities, fund preservation and growth activities, regular management expenses, and construction and development expenses) according to the social insurance accounting system established by Decision No. 1124/TC/QĐ/CĐKT dated December 12, 1996, issued by the Minister of Finance. Review and consolidate final accounts, submit them to the Management Council for approval, and send them to the Ministry of Finance.

1.8. Inspect the operations of subordinate social security agencies in terms of:

Compliance with revenue and expenditure regulations for social insurance.

Implementation of statistical, accounting, and financial reporting systems.

1.9. Handle violations related to social insurance revenue and expenditure according to state regulations.

2. Provincial and centrally-administered city social security agencies:

2.1. Prepare quarterly and annual plans for social insurance revenue and expenditure, and administrative management costs, and submit them to the Vietnam Social Security.

2.2. Urge units under their jurisdiction to fully and timely collect social insurance contributions, record and confirm the social insurance revenue for workers as prescribed.

2.3. Allocate funds according to the approved budget to district social security agencies.

2.4. Prepare quarterly and annual final reports on social insurance revenue and expenditure, and administrative management costs, and submit them to the Vietnam Social Security.

2.5. Supervise and handle violations related to social insurance revenue and expenditure within their jurisdiction according to the division of responsibilities by the Vietnam Social Security.

3. District and town social security agencies:

3.1. Prepare quarterly and annual plans for social insurance revenue and expenditure, and administrative management costs, and submit them to the provincial social security agency.

2.5. Inspect, supervise the collection and expenditure of the social insurance fund and handle violations related to the collection and expenditure of social insurance within the local area according to the分级授权的越南社会保险局的规定。

3. Social Insurance of Districts, Counties, and Municipalities:

3.1. Prepare plans for the collection and expenditure of social insurance, and management expenses for the quarter and year to be submitted to the Provincial Social Insurance.

3.2. Urge and guide agencies, units, and individuals participating in social insurance on the local territory to submit timely and fully for recording and confirming the amount of social insurance collected for workers.

3.3. Organize payments to beneficiaries of social insurance in a safe, full, and timely manner.

3.4. Regularly inspect and supervise the payment of social insurance by grassroots units, recover any payments made in violation of regulations, and report to higher-level social insurance authorities.

3.5. Prepare quarterly and annual settlement reports on social insurance revenues and expenditures, management expenses, and send them to the Social Insurance Department of the province or city.

PART IV. IMPLEMENTATION ORGANIZATION

1. This Circular takes effect from January 1, 1998. All previous provisions that conflict with the contents stipulated in this Circular shall cease to be effective.

1. The remainder is added to the social insurance fund for preservation and growth.
2. The Vietnam Social Security guides all levels of social insurance agencies to implement the contents prescribed in this Circular accurately. Any difficulties encountered during implementation should be reported to the Ministry of Finance for consideration and resolution./.

CONTENTS OF REGULAR MANAGEMENT EXPENSES OF THE SOCIAL INSURANCE SYSTEM
VIETNAM SOCIAL SECURITY
(Annexed to Circular No. 85/1998/TT-BTC dated June 25, 1998 of the Ministry of Finance)
(Date: June 25, 1998, Ministry of Finance)