Decision No. 144/QD-TTg dated February 01, 2014 of the Prime Minister on approving the scheme on formation and development of the voluntary pension program in Vietnam

DECISION

Approving the scheme on formation and development of the voluntary pension program in Vietnam[1]

THE PRIME MINISTER

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

Pursuant to the Labor Code of June 18, 2012;

Pursuant to Resolution No. 21-NQ/TW of November 22, 2012, of the Political Bureau on enhancement of the Party leadership over social insurance and health insurance in the 2012-2020 period;

Pursuant to the Prime Minister’s Decision No. 252/QD-TTg of March 1, 2012, approving the strategy on development of the securities market through 2020;

At the proposal of the Minister of Finance,

DECIDES:

Article 1.To approve the scheme on formation and development of the voluntary pension program in Vietnam with the following principal contents:

1. Objectives

a/ General objectives

To form and develop a voluntary pension program aiming to build a multi-pillar pension system in Vietnam, contributing to the assurance of social security under the Political Bureau’s Resolution No. 21-NQ/TW of November 22, 2012; and at the same time to encourage thrift and expand the basis for long-term capital investors on the capital market under the strategy on development of the securities market through 2020.

b/ Specific objectives

- By 2020, there will be some 400-500 enterprises with around 150,000 persons buying pension insurance products or making contributions to voluntary pension funds in the form of investment entrustment.

- By 2020, the accumulated turnover of voluntary pension funds for reinvestment in the economy, including the capital and securities markets, will approximate VND 10-12 trillion.

2. Participants

Employees and employers (enterprises) that sign labor contracts are encouraged to participate in the voluntary pension program. Employees and enterprises may only participate in, and enjoy preferential policies from, the voluntary pension program when they fully participate in all compulsory social insurance programs prescribed by law.

3. Policies to encourage the voluntary pension program

The State shall encourage employees and enterprises to participate in the voluntary pension program through various products of the program, and adopt tax preferences for contributed amounts, investment profits and payments to laborers when they reach the retirement ages. The conditions for enjoyment of tax preferences and specific tax preference levels must comply with the Law on Enterprise Income Tax and the Law on Personal Income Tax and guiding documents.

4. Implementation solutions

a/ To establish and complete the legal framework

- To formulate a decree on voluntary pension funds after the entrustment model that clearly prescribes the registration mechanism for establishment of the funds; the framework provisions on the organization and operation model; the mechanism for contribution and payment, investment limits of the funds to ensure safety of these pension funds; and the mechanism of information, reporting on, and supervision of, these funds. The time for completion and submission to the Government is 2014;

- To complete the legal framework on securities investment funds and investment entrustment on the securities market that expands and diversifies investment products on the capital market, consolidates the system of organized investors on the market in accordance with the Prime Minister-approved strategy on development of the securities market through 2020;

- To formulate legal documents guiding the Law on Personal Income Tax and the Law on Enterprise Income Tax that concretize the preferential policies for the voluntary pension program prescribed in the laws. The guiding documents must clearly define subjects, levels and conditions for accounting as expenditures, for exclusion from taxable incomes or tax exemption from and reduction of contributed amounts, investment profits and payments from the voluntary pension program. The completion time is in 2014.

b/ Development of voluntary pension products

- For pension insurance products, employees and enterprises shall sign contracts with life insurance companies for application of the mechanism of insurance premium contribution, monitoring of personal accounts and payment to employees participating in the voluntary pension program under Law No. 24/2000/QH10 on Insurance Business and Law No. 61/2010/QH12 Amending and Supplementing a Number of Articles of the Law on Insurance Business and guiding documents;

- To study and develop products of voluntary pension funds with the contributions of employees and employers (enterprises) after the establishment, operation, management and supervision models conformable with international practices and practical conditions of Vietnam, aiming to contribute to the assurance of social security and expand the basis for long-term capital investors on the capital market.

c/ State management mechanism

- For the pension insurance products, the State manages and oversees the supply of pension insurance products under Law No. 24/2000/QH10 on Insurance Business and Law No. 61/2010/QH12 Amending and Supplementing a Number of Articles of the Law on Insurance Business and guiding documents;

- For voluntary pension products after the fund model, the State manages and oversees the establishment registration and the materialization of the voluntary pension program at enterprises, clearly stating the participants; fundamental contents of the program (mechanisms on contribution, investment, payment to laborers when they reach the retirement ages. The management and supervision are effected through frame provisions on organization and operation models of voluntary pension funds, the provisions on investment limits and mechanisms on information, reporting and supervision, applicable to voluntary pension funds.

Article 2.Organization of implementation

1. The Ministry of Finance shall assume the prime responsibility for, and coordinate with related agencies in, performing the following major tasks:

a/ Studying and submitting to the Government for promulgation a decree on voluntary pension funds after the entrustment model;

b/ Studying and submitting to competent authorities amendments and supplements to the legal frameworks on securities investment funds and investment entrustment on the securities market toward expanding and diversifying the investment products on the capital market and consolidating the system of organized investors on the market;

c/ Coordinating with the Ministry of Labor, War Invalids and Social Affairs in developing the voluntary pension program and performing the state management role according to their assigned responsibilities and vested powers;

d/ Reviewing and assessing the implementation of the voluntary pension program and reporting it to the Prime Minister.

2. The Ministry of Labor, War Invalids and Social Affairs shall assume the prime responsibility for, and coordinate with related agencies in, performing the following major tasks:

a/ Studying mechanisms and policies for development of compulsory additional pension insurance aiming to diversify forms of social insurance participation;

b/ Coordinating with the Ministry of Finance in studying a decree on voluntary pension funds after the entrustment model;

c/ Perform the state management role related to its assigned responsibilities and vested powers.

Article 3.This Decision takes effect on the date of its signing.

Article 4.Ministers, heads of ministerial-level agencies, heads of government- attached agencies, chairpersons of provincial-level People’s Committees and heads of related agencies shall implement this Decision.-

Prime Minister
NGUYEN TAN DUNG