Vietnam Social Insurance: Lump-Sum Withdrawals and Pension

What are the main employment law sources and regulators in Vietnam?

The main employment law sources in Vietnam are the Labor Code 2019 and the Social Insurance, Health Insurance, and Employment Laws, together with their guiding decrees and circulars. The key regulators are the Ministry of Labor - Invalids and Social Affairs (MOLISA), provincial Departments of Labor (DOLISA), and Vietnam Social Security (VSS/BHXH Viet Nam).

Core statutes and regulations include:

• Labor Code 2019 (Law No. 45/2019/QH14) - rules on contracts, working time, wages, discipline, termination.
• Law on Social Insurance 2014 and the Amended Social Insurance Law 2024 (effective 1 July 2025) - compulsory and voluntary social insurance, pensions, lump-sum withdrawals.
• Law on Employment 2013 - unemployment insurance and job placement services.
• Law on Health Insurance 2008 (as amended) - compulsory health care coverage.
• Law on Occupational Safety and Hygiene 2015 - occupational accident and disease benefits.
• Government decrees on regional minimum wages, social insurance contributions, and foreign workers.

Primary authorities and their roles:

• MOLISA - drafts labor regulations, issues guidance, oversees inspections.
• Provincial DOLISA - handles work permits, collective labor disputes, inspections.
• Vietnam Social Security (VSS/BHXH Viet Nam) - manages social, health, and unemployment insurance, collects contributions, processes claims.
• Labor Inspectorate - can fine employers, suspend operations, or require back-pay and back-contributions.

How do employment relationships and contracts work in Vietnam?

Employment in Vietnam is contract-based, and the Labor Code requires written contracts for most workers, with only three recognized term types: indefinite, fixed-term, and seasonal/specific jobs. Misclassifying employees as contractors or using repeated short fixed terms can trigger legal reclassification, back-pay, and social insurance liabilities.

Types of employment contracts

• Indefinite term contract - no fixed end date, typically used for long-term staff and offers the strongest job security.
• Fixed-term contract (12-36 months) - can only be renewed once; a third consecutive term usually becomes indefinite by law.
• Specific job/seasonal contract (<12 months) - limited use; inappropriate use can be treated as a normal employment relationship.

Key mandatory contents

An employment contract must be in writing (except for some very short casual jobs) and must at least cover:

• Job title and description.
• Workplace(s).
• Term of the contract.
• Salary, allowances, and other benefits, salary payment time and method.
• Working hours and rest periods.
• Social, health, unemployment insurance participation.
• Training, confidentiality, and any service terms (if applicable).

Vietnam increasingly accepts electronic contracts if they meet e-transaction rules. However, in audits or disputes, authorities still prefer clear, signed, and bilingual (Vietnamese plus a foreign language) documents for foreign-invested enterprises.

What are standard working hours, overtime, and rest rules in Vietnam?

Standard working time is 8 hours per day and 48 hours per week, with an increasing policy push toward 40 hours. Overtime is strictly capped, requires employee consent, and must be paid at premium rates depending on when the work occurs.

Working hours and rest

• Normal hours: up to 8 hours/day and 48 hours/week; employers can arrange weekly or daily limits by internal rules.
• Daily rest: at least 30 minutes break for shifts of 6 hours or more; at least 45 minutes for night work.
• Weekly rest: at least 24 consecutive hours/week.
• Annual leave: at least 12 working days/year, increasing with seniority and hardship conditions.

Overtime rules

• Overtime requires employee consent except in narrow emergency cases.
• Maximum overtime:
  • No more than 50% of normal daily hours, or 12 hours/day in total.
  • Up to 40 overtime hours/month and 200 hours/year (some sectors allowed up to 300 hours/year under specific decrees).
• Overtime pay multipliers (on the normal hourly salary):
  • Weekdays: at least 150%.
  • Weekly rest days: at least 200%.
  • Public holidays and paid leave days: at least 300% (not including the normal salary for that holiday).
  • Night work: additional premiums on top of overtime rates.

How are wages and mandatory contributions structured in Vietnam?

Vietnam uses regional minimum wages, and employers must pay at least this level plus compulsory social, health, and unemployment insurance for eligible employees. These contributions significantly increase the total cost of employment compared to the gross salary stated in the contract.

Minimum wages

• Vietnam applies a regional minimum wage system by Government Decree (Region I to IV).
• Minimums vary by location and are adjusted periodically; they apply to unskilled workers, with at least 7 percent higher rates recommended for workers in jobs requiring vocational training.
• For social insurance purposes, the contribution salary cannot be lower than the applicable regional minimum wage for Vietnamese workers.

Mandatory contribution structure

Typical compulsory contributions for Vietnamese employees (subject to change by new decrees):

Illustrative monthly cost for a Vietnamese employee (figures approximate):

How does Vietnam's social insurance system work for employees and expats?

Vietnam's social insurance system is mandatory for most employees and covers long-term (retirement, survivorship) and short-term (sickness, maternity, occupational accident) benefits. Both Vietnamese and most foreign employees with qualifying contracts must participate, although foreigners often exit via lump-sum payments rather than pensions.

Compulsory vs voluntary social insurance

• Compulsory social insurance covers:
  • Vietnamese employees with contracts of at least one month.
  • Foreign employees with Vietnam work permits and contracts of at least one year (with some exceptions).
• Voluntary social insurance targets:
  • Self-employed, informal workers, and those not in compulsory schemes.
  • It mainly covers retirement and survivorship, not short-term benefits.

Main benefit types

• Retirement pension - monthly payments upon reaching retirement age and meeting minimum contribution years (20 years under the 2014 Law; 15 years from 1 July 2025).
• Lump-sum social insurance - one-time withdrawal in specific cases, including long periods without contributions, serious illness, or leaving Vietnam permanently (for foreigners); rules change materially from 1 July 2025.
• Sickness and maternity - replacement income when off work for illness, pregnancy, childbirth, or adoption, subject to contribution conditions.
• Occupational accident and disease - medical coverage and income replacement, potentially with lump-sum or monthly allowances.
• Survivorship - benefits for dependants when the insured dies.

What changed under the Amended Social Insurance Law from 1 July 2025?

From 1 July 2025, the Amended Social Insurance Law keeps the compulsory nature of social insurance but shifts the system toward more people receiving pensions instead of lump-sum withdrawals. The law reduces the minimum years needed for a pension to 15, tightens and restructures the lump-sum withdrawal rules, and expands coverage to more categories of workers, including some non-standard and foreign workers.

Headline changes

• Reduced minimum service for pensions:
  • Minimum contribution period for a pension decreases from 20 years to 15 years.
  • Phased implementation and transitional rules apply for those already in the system.
• Lump-sum withdrawal policy overhaul:
  • The classic "all-out" lump-sum option after 12 months without contributions is restricted.
  • The law introduces partial withdrawals and preservation of a portion of contributions to secure future pension rights.
  • Hardship cases (serious illness, permanent emigration, reaching pension age without enough years) maintain broader withdrawal rights.
• Broader coverage:
  • More categories of short-term contracts, platform workers, and flexible workers fall into compulsory social insurance if they meet specified criteria.
  • Clarifications on coverage for foreign employees and coordination with host/home country regimes.
• Administrative and digital reforms:
  • More electronic records and online submissions through VSS portals.
  • Clearer coordination between social insurance, employment, and health funds.

Because implementing decrees are critical in Vietnam, employers should track MOLISA and VSS guidance in 2024-2025 to understand exact contribution and benefit formulas.

Can you still withdraw social insurance in a lump sum after 12 months of stopping work?

Yes, from 1 July 2025 workers can still apply for a lump-sum withdrawal after 12 consecutive months of not paying social insurance, but the right is narrower and often only allows a partial withdrawal. Many people will see lower immediate cash-outs and more of their contribution preserved for future pension or survivorship benefits.

The traditional 12-month rule (before 1 July 2025)

• Under the 2014 Law, a worker could usually take a lump-sum social insurance benefit if:
  • They stopped working and did not pay social insurance for 12 consecutive months, and
  • They had less than 20 years of contributions, or met certain other conditions.
• The lump-sum was typically based on the total contribution period:
  • About 1.5 months of the average contributable salary per year for the years before 2014.
  • About 2 months per year for the years from 2014 onwards.
• Foreigners leaving Vietnam permanently could also withdraw the entire compulsory social insurance amount in one go.

The 12-month rule after the 2025 amendments

The amended law keeps the principle that you can apply after 12 months without contributions, but it changes what you can take and how it affects your future pension rights.

Key policy directions (subject to detailed implementing regulations):

• Partial withdrawal:
  • Many workers will only be able to withdraw the portion of contributions that correspond to their own 8 percent employee contributions plus investment returns.
  • A part of the employer-funded contributions is preserved in the system as a "frozen" period for future pension calculation.
• Preserved insurance period:
  • Even after a partial withdrawal, your credited social insurance years do not always reset to zero.
  • If you rejoin the system later, those preserved years can count toward the 15-year minimum for a pension.
• Hardship and special cases:
  • People with life-threatening diseases (for example late-stage cancer, cirrhosis, severe TB, HIV progressing to AIDS) still have the right to withdraw more or all of their accumulated benefits.
  • Those emigrating permanently or foreigners ending their Vietnam employment and leaving the country may retain broader full lump-sum rights.
• Transitional rules:
  • Workers who started contributing before 1 July 2025 may have a choice between the old and new methods for some periods, or may receive enhanced options during a transition window.
  • The exact mechanics depend on final guiding decrees from MOLISA and VSS.

Practical steps if you want a lump-sum withdrawal

1. Confirm your insurance status:
   • Check your total contribution years and recorded salary via the VSS online portal or local social insurance office.
   • Confirm that you have had no contributions for at least 12 consecutive months.
2. Check which law version applies:
   • Applications made before 1 July 2025 follow the 2014 Law rules.
   • Applications made from 1 July 2025 onward follow the amended rules and any transitional guidance.
3. Prepare your dossier (typical documents):
   • Application form for lump-sum social insurance benefit (VSS form).
   • ID/passport and household registration or residence documents.
   • Social insurance book or digital insurance information.
   • For foreigners or emigrants: proof of permanent departure (visa, residence permit abroad, or approved emigration dossier).
4. Submit to VSS:
   • Submit at the district or provincial social insurance agency where you last contributed or where you reside.
   • Standard processing time is often about 10 working days from receipt of a valid dossier.
5. Plan for tax and currency:
   • Lump-sum social insurance benefits typically have favorable tax treatment, but always check current personal income tax rules.
   • Foreigners should check bank fees and FX rules when remitting funds overseas.

How does the new 15-year minimum contribution for pensions work?

From 1 July 2025, you can qualify for a monthly state pension with only 15 years of social insurance contributions instead of 20. The shorter minimum period is designed to reduce pressure on workers to cash out early and to make pensions accessible to more low-income and informal workers.

Qualifying for a pension under the new rules

• Contribution period:
  • Minimum 15 years of social insurance contributions, including both compulsory and voluntary periods.
  • Periods preserved under the amended lump-sum rules can count toward this total.
• Retirement age:
  • Retirement age in Vietnam is gradually increasing, with different ages for men and women and for special occupations.
  • You must both reach the legal retirement age and satisfy the minimum years to receive a full pension; early retirement is possible in specified hardship cases but reduces the benefit.
• Benefit calculation (high-level):
  • Pension is based on a percentage of your average contributable salary over a defined period (which has been lengthening over time).
  • The percentage scales with contribution years: fewer years yield a smaller percentage, while more years (for example 25-30) can provide a significantly higher replacement rate.

Who gains from the 15-year rule?

• Older workers with fragmented careers who might only reach 15-18 years of contributions before retirement age.
• Women who took time out of the workforce and may struggle to hit 20 years.
• Low-income and informal workers who can now combine shorter compulsory periods with voluntary contributions to reach 15 years.
• Foreigners who stay long-term and may now realistically qualify for a Vietnam pension instead of only relying on lump-sum payments.

HR and payroll teams should encourage employees approaching mid-career to track their accumulated years and consider voluntary contributions if they change to non-covered roles but wish to secure a pension.

What social insurance rules apply to foreign employees and contract/gig workers?

Foreign employees with qualifying Vietnam labor contracts are generally subject to compulsory social insurance, though they are usually exempt from unemployment insurance. The 2025 reforms broaden coverage for some outsourced and gig-style workers, limiting the use of "service contracts" to avoid social insurance obligations.

Foreign employees

• Who is covered:
  • Foreigners with a valid work permit, practice certificate, or practice license, and a labor contract of at least 1 year with a Vietnam employer.
  • Exemptions can apply for intra-company transferees or where a totalization agreement exists with a home country (where applicable).
• Contribution rates (typical structure):
  • Employer: about 17.5 percent of salary to social insurance (retirement, sickness, maternity, occupational accident and disease).
  • Employee: about 8 percent of salary to social insurance (retirement and survivorship).
  • Foreigners usually do not pay Vietnam unemployment insurance.
• Lump-sum exit:
  • When a foreign employee's labor contract and work permit end and they leave Vietnam, they can usually claim a lump-sum social insurance payment.
  • The 2025 amendments preserve this exit route but may refine procedures and documentation for proof of departure.

Contract and gig workers

Vietnam has long used "service contracts" (civil contracts) to engage individuals for tasks, but when the relationship has employment characteristics, authorities can reclassify it as employment with full social insurance obligations.

• Indicators of an employment relationship include:
  • Fixed working hours and workplace controlled by the company.
  • Supervision, performance management, and disciplinary powers.
  • Provision of tools, equipment, and integration into internal structures.
• Coverage of non-standard workers under the amended Social Insurance Law:
  • The law aims to gradually include more part-time, seasonal, and platform workers into compulsory social insurance when they work under conditions similar to employees.
  • Specific thresholds (for example minimum hours or income) and platform obligations will be detailed in decrees, but the direction is clearly toward less room for avoidance.

Businesses that rely heavily on freelancers or ride-hailing/delivery platforms should monitor these rules closely and budget for potential social insurance cost increases.

How are termination, severance, and unemployment insurance benefits handled?

Termination in Vietnam is tightly regulated, and improper termination exposes employers to reinstatement orders, back pay, and penalties. When employment ends, employees may be entitled to severance or job-loss allowances, and Vietnamese workers with unemployment insurance can receive monthly benefits.

Termination basics

• Permissible grounds under the Labor Code include:
  • Mutual agreement.
  • Expiry of fixed-term contract without renewal.
  • Disciplinary reasons meeting strict procedural standards.
  • Redundancy or restructuring based on organizational changes or technology.
  • Repeated failure to perform, duly documented and reviewed.
• Notice periods:
  • Typically 30 days for fixed-term contracts, 45 days for indefinite contracts.
  • Shorter or longer notices can apply for specific jobs and probationary periods.

Severance and job-loss allowance

• Severance allowance:
  • Applies when the contract ends lawfully and the employee has worked regularly for 12 months or more.
  • Standard formula: half a month's salary for each year of service, excluding periods where unemployment insurance already provided coverage.
• Job-loss allowance:
  • Applies for redundancy cases due to economic reasons or restructuring.
  • At least 1 month's salary per year of service, with a statutory minimum total payment.

Unemployment insurance (Vietnamese employees)

• Eligibility typically requires:
  • At least 12 months of unemployment insurance contributions in the 24 months before job loss (for fixed-term contracts) or in the 36 months (for some other cases).
  • Lawful termination and registration with the Employment Service Center within the prescribed deadline (usually 3 months).
• Benefit level:
  • Monthly unemployment allowance is a percentage of the average contributable salary of the last 6 months, subject to a cap.
  • Maximum benefit duration is often 12 months, depending on contribution history.

When should you hire a Vietnam employment or social insurance lawyer?

You should bring in a Vietnam employment or social insurance lawyer when your situation goes beyond routine payroll and HR administration or when significant money or regulatory risk is at stake. Early legal input is usually cheaper than defending an inspection, lawsuit, or retroactive social insurance assessment.

Common trigger situations

• Structuring your workforce:
  • Setting up a new entity in Vietnam and designing employment models (direct hires, EOR, outsourcing, contractors, gig workers).
  • Planning to rely heavily on service contracts or freelancers.
• Foreign staff and cross-border issues:
  • Hiring or terminating expats, secondments, or regional managers based partly in Vietnam.
  • Coordinating Vietnam social insurance with home-country pension and social security systems.
• Major terminations or restructurings:
  • Closing a department, redundancy programs, or mass layoffs.
  • Negotiating mutual separations with senior executives.
• Lump-sum withdrawal and pension disputes:
  • Workers denied a lump-sum withdrawal after the 2025 changes.
  • Disputes about recorded contribution periods or average salary for pension calculation.
• Inspections and disputes:
  • MOLISA or VSS inspections, threatened fines, or back-pay/back-contribution claims.
  • Labor disputes that may lead to mediation, arbitration, or court.

What are the practical next steps for employers and workers in Vietnam?

Both employers and workers should treat 2024-2025 as a transition period to adapt to the amended Social Insurance Law and the changing balance between lump-sum withdrawals and pensions. A structured review and communication plan can reduce compliance risk and avoid unpleasant surprises for employees.

For employers and HR/finance teams

1. Audit current contracts and classifications:
   • Check that everyone who should be an employee is on an employment contract.
   • Review use of fixed-term contracts, service contracts, and gig arrangements for misclassification risk.
2. Verify social insurance registrations and payments:
   • Reconcile payroll records with VSS records to detect gaps or underpayments.
   • Confirm correct contribution bases and that you observe salary caps and minimums.
3. Budget for foreign and non-standard workers:
   • Estimate the cost impact of bringing more categories into compulsory insurance under the 2025 rules.
   • Update offer letters and total reward calculations accordingly.
4. Update internal policies and communications:
   • Explain to employees how the new lump-sum and 15-year pension rules work.
   • Encourage long-term planning rather than assuming a full cash-out after 12 months of quitting.
5. Prepare for inspections:
   • Maintain complete personnel files, signed contracts, payroll slips, and contribution evidence.
   • Designate a responsible person or team to handle inquiries from MOLISA, DOLISA, and VSS.

For workers and individual expats

1. Get your contribution history:
   • Register for online access to the VSS portal or visit your local office to obtain a contribution statement.
   • Check for missing months or wrong salary figures and correct them early.
2. Decide on your long-term strategy:
   • If you are likely to work in Vietnam or under Vietnamese social insurance for 15+ years, consider planning for a pension rather than assuming a lump-sum.
   • If you plan to migrate or change countries, understand your lump-sum exit options and timing.
3. Time your applications carefully:
   • If you are near the 1 July 2025 cut-over and considering a lump-sum withdrawal, compare the outcomes under both regimes with a professional.
   • For foreigners leaving Vietnam, start your lump-sum application process early to align with your visa and departure schedule.
4. Seek advice when rules are unclear:
   • Consult a Vietnam employment lawyer or a reputable social insurance consultant if your case involves multiple employers, cross-border work, or disputed records.
   • Use official VSS and MOLISA guidance rather than informal advice from colleagues.