How to Withdraw Social Insurance Funds as a Foreigner in Vietnam?

1. Eligibility for Withdrawal

In response to requests from labor representative organizations, unions employing foreign workers in Vietnam, and the requirement to incorporate higher labor standards in line with international conventions and agreements signed by Vietnam, notably the regulations of the International Labor Organization (ILO), Vietnam has drafted and prepared regulations concerning foreign workers in the Social Insurance Law 2014 No. 58/2014/QH13 (“Social Insurance Law 2014“) along with other legal documents such as Decree 143/2018/ND-CP (“Decree 143“) and the Labor Code 2019 No. 45/2019/QH14 (“Labor Code 2019“).

To ensure their rights, foreign workers in Vietnam need to clearly understand the legal provisions regarding lump-sum social insurance withdrawals in Vietnam. This article will analyze the important considerations that foreign workers in Vietnam need to be aware of when carrying out the lump-sum social insurance withdrawal procedures in Vietnam.

According to Decree 143, foreign workers in Vietnam who hold a work permit, a practicing certificate, or a practicing license issued by a competent Vietnamese authority, and who have signed an indefinite-term labor contract or a definite-term labor contract of one year or more with an employer in Vietnam, are required to participate in the Vietnamese social insurance system.

Starting from December 2018, when Decree 143 came into effect, foreign workers in Vietnam must contribute to mandatory social insurance. During this period, foreign workers are entitled to three types of benefits: sickness, maternity, and occupational accidents – occupational diseases. The remaining two types of benefits, retirement and survivorship, have been officially implemented since 2022.

From January 1, 2022, foreign workers in Vietnam are required to contribute 8% of their monthly salary to the retirement and survivorship fund as stipulated in Clause 1, Article 12 of Decree 143.

Foreign workers in Vietnam can withdraw their social insurance funds in a lump sum under the following circumstances:

1. Reaching Retirement Age:

• Age Criteria: Men aged 60 or older and women aged 55 or older are eligible.
• Retirement Age Adjustment: The retirement age is gradually increasing until 2035.
• Special Cases: Workers in hazardous jobs or with disabilities may have different retirement ages.

2. Suffering from Life-Threatening Diseases:

• Specified Diseases: Individuals with conditions like cancer, polio, cirrhosis, leprosy, severe tuberculosis, HIV/AIDS, or other designated diseases are eligible.
• Disability: Those with an 81% or more labor capacity reduction and requiring assistance are also eligible.

3. Residency Status:

• No Longer Residing in Vietnam: Foreign workers who have met the retirement age and have less than 20 years of contributions can withdraw even if they no longer live in Vietnam.
• Labor Export: Workers who leave Vietnam for labor export are not eligible.
• Proof of Non-Residence: Provide evidence of your new residence.

4. Termination of Employment:

• Contract Termination or Permit Expiry: Foreign workers whose contracts end or permits expire without renewal can withdraw their funds.
• Penalties: Failure to renew permits can result in fines and deportation.

Key Points:

• Retirement Age: Be aware of the current retirement age and its gradual increase.
• Documentation: Prepare necessary documents, including proof of identity, contribution records, and health certificates if applicable.
• Tax Implications: Consult a tax professional to understand the tax implications of withdrawing social insurance funds.
• Legal Assistance: Seek legal advice if you encounter difficulties or have specific questions.

By understanding these provisions, foreign workers can make informed decisions regarding their social insurance withdrawals and ensure compliance with Vietnamese regulations.

2. Documentation Requirements

The specific documents required for foreign workers to submit a request for a lump-sum social insurance withdrawal in Vietnam depend on the circumstances of their withdrawal.

General Documents:

• Social Insurance Book: A finalized or consolidated social insurance book.
• Application Form: Form 14-HSB, issued by Vietnam Social Insurance in 2019.

Additional Documents:

• Passport: A passport translated into Vietnamese and certified as per Vietnamese law.
• Authorization Document (if applicable): If the application is submitted through a legal representative, an authorization document is required.

Specific Requirements:

• Health Records: For those withdrawing due to life-threatening diseases, medical records summarizing the condition or indicating a disability rate of 81% or more are necessary.
• Proof of Non-Residence: Foreign workers no longer residing in Vietnam may need to provide evidence such as a copy of the confirmation of renunciation of Vietnamese citizenship or documents showing the non-renewal of a work permit.

Important Note: The specific requirements may change over time, so it's advisable to consult with the relevant social insurance agency for the most up-to-date information.

3. Withdrawal Procedures

Step 1: Prepare the Withdrawal Dossier

• Complete Dossier: Ensure that your dossier contains all the necessary documents as outlined in previous sections.
• Legal Assistance: Consider using the services of a legal consultancy unit or law firm to ensure your dossier is prepared correctly and comprehensively.

Step 2: Submit the Dossier

• Local Social Insurance Agency: Submit your dossier to the district or provincial social insurance agency where you are registered.
• Submission Methods: You can submit your dossier by mail or in person.

Step 3: Social Insurance Agency Review

• Processing Time: The agency has a maximum of 10 days to process your dossier and provide a response.
• Appointment Slip: If your dossier is complete and valid, you will receive an appointment slip detailing the results of your withdrawal request, payment time, and method.
• Payment or Explanation: The agency will either disburse the social insurance amount or provide a written explanation if the request is not processed.

Key Points:

• Thorough Preparation: Ensure your dossier is complete and accurate to avoid delays.
• Legal Assistance: Consider seeking legal advice for complex cases or if you have language barriers.
• Patience: The processing time may vary, so be patient and follow up if necessary.

By following these steps and understanding the withdrawal process, foreign workers can increase their chances of successfully obtaining their lump-sum social insurance benefits.

4. Types of Withdrawals

Foreign workers in Vietnam may be eligible for different types of social insurance withdrawals depending on their circumstances. The most common types of withdrawals are:

• Lump-Sum Withdrawal: This involves receiving a one-time payment of your accumulated social insurance funds. It is typically available for foreign workers who meet the retirement age or other specified criteria.
• Monthly Pension Payments: In some cases, foreign workers may be eligible for monthly pension payments after reaching retirement age and meeting the required contribution period. The amount of the pension will depend on your total contributions and the prevailing pension rates.

Additional Withdrawal Options:

• Early Withdrawal: Under certain circumstances, foreign workers may be eligible for early withdrawal of their social insurance funds, such as in cases of disability or severe financial hardship. However, this may involve additional requirements and potential penalties.
• Partial Withdrawal: In some situations, it may be possible to withdraw a portion of your social insurance funds while continuing to contribute to the system.

It's important to consult with the relevant social insurance agency or a legal professional to determine the specific withdrawal options available to you and the associated requirements.

Note: The availability of different withdrawal types may change over time, so it's advisable to stay updated on the latest regulations.

5. Tax Implications

Tax Treatment:

• Income Tax: In general, the withdrawal of social insurance funds is subject to income tax in Vietnam. The specific tax rate may vary depending on the amount withdrawn and your overall income.
• Tax Deductions: There may be certain tax deductions or exemptions available for social insurance withdrawals, such as deductions for medical expenses or disability-related expenses.

Professional Tax Advice:

• Individual Circumstances: The tax implications of your social insurance withdrawal may depend on your individual circumstances, such as your residency status, income level, and other factors.
• Consult a Tax Professional: It is highly recommended to consult with a tax professional to get personalized advice on the tax treatment of your social insurance withdrawal.
• Accurate Calculations: A tax professional can help you accurately calculate your tax liability and ensure compliance with Vietnamese tax laws.

By seeking professional tax advice, you can avoid potential penalties and ensure that you are paying the correct amount of taxes on your social insurance withdrawal.

6. Challenges and Considerations

Foreign workers in Vietnam may encounter several challenges and considerations when withdrawing their social insurance funds:

• Language Barriers: Communicating with social insurance agencies and understanding the regulations may be difficult if you do not speak Vietnamese fluently.
• Administrative Hurdles: The withdrawal process can be complex and time-consuming, involving various administrative steps and documentation.
• Limited Access to Information: Information about social insurance withdrawal procedures and requirements may not be readily available in English or other foreign languages.
• Changing Regulations: Social insurance regulations may change over time, affecting the eligibility criteria and withdrawal procedures.
• Local Knowledge: Having knowledge of the local customs and practices can be helpful in navigating the withdrawal process.

To address these challenges, foreign workers may consider:

• Seeking Assistance: Consulting with a legal professional or a social insurance advisor who specializes in assisting foreigners.
• Language Services: Using translation services or finding a Vietnamese-speaking interpreter to help with communication.
• Patience and Persistence: The withdrawal process may take time, so be patient and persistent in following up with the social insurance agency.
• Stay Informed: Stay updated on any changes to social insurance regulations or procedures.

By understanding the potential challenges and taking proactive steps, foreign workers can increase their chances of successfully withdrawing their social insurance funds in Vietnam.

7. Seeking Assistance

If you encounter difficulties or have questions regarding the process of withdrawing social insurance funds in Vietnam, seeking assistance from the appropriate authorities or professionals can be helpful.

Social Insurance Agency:

• Contact Information: Contact the social insurance agency responsible for your region for guidance and support. They can provide information on the specific procedures, requirements, and any recent changes to the regulations.
• In-Person Assistance: You may be able to visit the social insurance agency in person to obtain assistance and submit your application.

Legal Advice:

• Consult a Professional: Consider consulting with a legal professional who specializes in labor and social security matters. They can provide expert advice and guidance on the withdrawal process, address any legal issues, and represent your interests.
• Language Services: If you have difficulty communicating in Vietnamese, a legal professional can help you navigate the language barriers and ensure that your rights are protected.

Other Resources:

• Online Forums or Communities: There may be online forums or communities where foreign residents in Vietnam can share information and experiences related to social insurance withdrawals.
• Embassy or Consulate: If you are facing significant difficulties, you may be able to seek assistance from your country's embassy or consulate in Vietnam.

By seeking assistance from the appropriate sources, foreign workers can increase their chances of successfully withdrawing their social insurance funds and resolving any issues that may arise.

8. Conclusion