Expats in Vietnam to be hit by social security payments

Starting in 2022, expats professionals living and working in Vietnam must pay compulsory social security premiums.

The new government decree is due to come into force on the first of December this year, with the charge applicable to all expatriates with contracts lasting longer than one year. Monies raised will be placed in a retirement fund, and the basic social insurance package will consist of cover for occupational diseases, delivery, sickness and accidents in addition to retirement and death in the same manner in which Vietnamese workers are covered.

Expat employees who qualify will pay eight per cent of their monthly income to the death and retirement fund, whilst employers must contribute 17.5 per cent of employees’ monthly salaries. This amount will be split between three per cent to the maternity and sickness fund, 0.5 per cent to the accident and occupational disease fund and 14 per cent to the death and retirement fund. The draft decree was met with strong opposition by foreign-owned businesses due to its effect on their costs, and wasn’t popular with workers due to the fact that the majority also pay social security charges in their home countries.

A representative of the American Chamber of Commerce in Vietnam pointed out that many expatriates working in the Southeast Asian country are on short-term contracts and are either ineligible for a pension or don’t want one, making the entire scheme irrelevant at best. At the present time there are an estimated 84,000 expatriates living and working in Vietnam, a vast increase from the 2004 total of 12,600.