Proposal to use employees' pension funds to buy life insurance
The Ministry of Finance has just consulted with ministries, branches, associations, and enterprises on the draft Decree of the Government regulating supplementary pension insurance.
After submitting the draft, the Ministry of Finance received 6 official dispatches expressing opinions from ministries and branches; 1 opinion from the association.
One of the notable contents is related to the proposal to use a part of the pension fund to buy life insurance.
In the draft Decree, the Ministry of Finance has proposed a policy to ensure the payment level from the pension fund based on the investment results of the fund, through the addition of regulations on the right of employees participating in the pension fund to supplement the payment of the minimum level when reaching retirement age through a life insurance contract with periodic payment, with the total insurance premium being at least 5% of the total amount contributed to the pension fund.
Accordingly, a part of the money contributed to the pension fund of participants will be used to buy a life insurance contract with periodic payments provided by a life insurance company according to the law on insurance business.
However, the Stock Exchange Association believes that implementing this policy is not feasible in practice.
This Association gave the reason: Participating in pension funds is voluntary and the fund operates according to market principles, so the regulation of using 5% of the amount contributed to the pension fund to buy insurance contracts is not in accordance with the principle of law.
Buying an insurance contract will have to meet insurance requirements such as health check-ups, appraisals, minimum fees, etc., which will cause significant difficulties for participants and the operation of fund management companies, while increasing the costs of the fund and participants.
The fund is not a legal entity to select suppliers and life insurance products for each customer.
The fund's purchase of insurance for customers can create a negative image of the voluntary supplementary pension fund product and may arise legal problems later when the insurance company does not comply with the contract.
In addition, due to the impact of some recent non-transparent cases in brokerage and life insurance contract offering, life insurance products with periodic payments are tending to reduce supply.
The Ministry of Finance said that, in response to the Association's opinions, in the draft Decree, the Ministry has removed the regulation on the right of participants to have the pension fund ensure the payment of the minimum level when reaching retirement age through a life insurance contract with periodic payments in the draft Decree.
Proposal on investment rate in government bonds
Also in the document of the Ministry of Finance, the Ministry said that it did not accept many other comments. A typical example is giving comments on the investment limit in government bonds.
Previously, the Stock Exchange Association proposed to unify an investment ratio in government bonds of 30% for funds with a scale of VND5 billion or more because funds with a scale of less than VND5 billion will find it difficult to invest in government bonds.
The Ministry of Finance did not accept this comment and said that the regulation on the minimum investment ratio in government bonds is to ensure the safety of the fund's investment activities and is consistent with the goal of developing long-term institutional investors in the government bond market, contributing to supporting the work of mobilizing capital for the state budget.
The draft Decree only requires meeting the minimum investment ratio in government bonds for funds with a scale of VND50 billion or more, accordingly, ensuring that newly established funds and small-scale funds are not entangled in this regulation. Therefore, the Ministry of Finance maintains the provisions in the draft Decree.
Second content, the Ministry of Finance does not accept additional comments on the responsibility of the Ministry of Finance to guide the standardization of communication content on supplementary pension insurance.
Previously, the Central Committee of the Fatherland Front proposed to add the responsibility of the Ministry of Finance (Article): standardize communication content, product introduction documents, and mandatory risk warnings.
Regarding this comment, the Ministry of Finance has the following opinion:
In response to the opinions of the Fatherland Front, the Ministry of Finance has added specific regulations in the draft Decree (Article 27, Article 27.) on the content of documents introducing supplementary pension insurance.
It must clearly state the risks with easy-to-understand and outstanding content (deeply, separately). The content includes: People participating in pension funds on a voluntary basis and accepting risks in investment according to the goals and investment policies stipulated in the Fund Charter; Payment regime depends on the accumulated contribution value and pension investment results after deducting related expenses allocated to each pension account; Supplementary pension insurance is a product under the market mechanism, not guaranteed by the State for profits and payment amount; Participants may have their personal pension account value reduced when the market fluctuates and need to balance tax benefits between employers and employees; Supplementary pension insurance is different from the State pension regime, other than insurance products under the law.
At the same time, the draft Decree also stipulates the responsibility to disclose information about pension programs to participants; the responsibility of fund management enterprises and supplementary pension insurance agents when introducing products.
Accordingly, the Ministry of Finance submitted to the Government not to supplement the responsibility of the Ministry of Finance in guiding the introduction documents on supplementary pension insurance in the draft Decree.
