Vietnam Social Insurance Merger: Complete Guide to New Model and Compliance Processes

Key takeaways

• Vietnam’s social insurance system has been restructured into 3 tiers, with 34 provincial units replacing the previous 63, eliminating district-level offices
• Companies involved in mergers must complete the full process: reduce employees at old units, register increases at new units, and transfer all financial obligations
• Local social insurance offices now serve as direct points of contact for businesses, managing commune/ward areas, and handling all procedures
• Employee benefits remain protected through 100% digitization and nationwide data integration
• Non-compliance or delays can disrupt business operations and seriously impact employee benefits
• Foreign businesses operating in Vietnam must adapt to these changes to maintain legal compliance

This transformation stems from Vietnam’s government push for decisive administrative reform to create a more streamlined and efficient state apparatus. Beginning July 1, 2025, the entire country will officially adopt a two-tier local government model consisting of provinces/cities and communes/wards/towns, completely eliminating districts and counties. To stay in sync with this reform, Vietnam’s social insurance system, after merger, has undergone comprehensive restructuring, directly affecting compliance and operational processes for all businesses operating in the country.

How does the new social insurance model work?

This new structure brings fundamental changes in organization, management hierarchy, and function allocation that every CEO with Vietnam operations needs to understand to adjust their compliance strategy.

Organizational changes and new naming

The most immediate and visible change involves naming and organizational scale. “Regional Social Insurance” has been officially renamed “Provincial Social Insurance” to align completely with the new administrative units after the merger. More significantly, the number of units has been dramatically streamlined from 63 provincial/city social insurance offices down to just 34 provincial social insurance units nationwide.

Provincial social insurance headquarters must be located at provincial administrative centers, with full legal entity status and separate official seals as required by law. Each provincial social insurance unit can have a maximum of 10 advisory departments, ensuring a lean structure while maintaining effective management and administration.

Streamlined management structure

New model: 3 tiers instead of 4

• Before: Vietnam Social Insurance → Provincial → District → Business
• After: Vietnam Social Insurance → Provincial → Local → Business

Vietnam’s new social insurance organizational model follows a clear and logical 3-tier structure: Vietnam Social Insurance at the central level, Provincial Social Insurance at the intermediate level, and Local Social Insurance at the grassroots level. The most significant change is that district/county social insurance levels have been eliminated, replaced by “Local Social Insurance” offices that report directly to Provincial Social Insurance.

Local Social Insurance offices in the new model will manage commune/ward areas and serve as the direct point of contact with businesses and citizens. Notably, Local Social Insurance offices are designed without complex internal organizational structures, helping streamline processes and reduce administrative red tape.

Redistributed functions and responsibilities

The new functional hierarchy creates clearer responsibility divisions between levels, helping businesses identify the right contact points for different types of procedures.

• Provincial social insurance will handle the comprehensive management of social insurance, health insurance, and unemployment insurance programs across the entire province. At the same time, Provincial Social Insurance directs, inspects, and closely supervises all activities of subordinate Local Social Insurance offices. Another key responsibility is driving comprehensive digital transformation and information technology implementation according to the 3-tier model.
• Local social insurance offices in their new role will directly receive and process all collection files, issue books and cards, handle employee registration changes, and manage all administrative procedures for businesses and citizens in their assigned areas.

What do businesses need to do to ensure compliance?

The compliance process during this transition period demands absolute precision and proper sequencing to avoid legal risks that could affect business operations. Social insurance filings for businesses in Vietnam are particularly critical during this period.

1. Report complete employee reductions at old units

The first mandatory step for businesses being merged or ceasing operations is filing for complete employee reduction across all main unit codes and subsidiary codes (AD, BW, IC…). Importantly, the reduction report must include employees in special situations like unpaid leave, sick leave, maternity leave, suspended employment contracts, or detention.

At the same time, businesses must fully transfer and pay all social insurance, health insurance, unemployment insurance, and occupational accident insurance premiums for any outstanding or unpaid amounts. To avoid errors in this process, businesses should implement effective employee record management methods from the start.

2. Register and report employee additions at new units

New businesses or receiving units must register new information or update existing unit information by completing all required declarations using Form TK3-TS. The file must note the old unit code and include the original merger/consolidation/cessation/new establishment documentation.

Next, new businesses must report employee additions for social insurance, health insurance, unemployment insurance, and occupational accident insurance coverage for all transferred personnel, including special cases currently on sick leave, maternity leave, or similar situations. Additionally, businesses should establish standardized payroll processes to ensure consistency after the merger.

3. Fully transfer social insurance payments from old units

One of the most critical responsibilities for new businesses is to fully transfer any outstanding social insurance payments from old units. The transfer must follow the exact structure and code requirements shown above. This process ensures continuity and transparency in financial management, prevents losses, and ensures employee benefits aren’t affected during the transition.

4. Complete additional required procedures

To ensure data continuity without gaps, businesses need to complete several important additional procedures. First is submitting confirmation applications for social insurance and unemployment insurance participation history and obtaining separate record pages for employees. This documentation must be sent via postal service to the social insurance agency that managed the old unit for processing and receipt of File Acknowledgment 620.

For benefits that arose before the unit merger/consolidation/cessation date, new businesses are responsible for filing benefit applications according to regulations. These applications must be submitted to the social insurance agency under the new unit code for timely and complete processing and payment of social insurance benefits to employees.

When businesses need to transfer social insurance to another province in Vietnam, all transactions, filings, and administrative procedures from the transition date forward must use the name, address, and code of the new social insurance agency. Using accurate information ensures data synchronization and prevents errors that could affect business and employee rights.

Given the context of increasingly strict compliance regulations in Vietnam, following this process correctly becomes particularly important to avoid legal risks.

Fundamentally, this social insurance merger in Vietnam doesn’t affect employee benefits. Thanks to comprehensively upgraded information technology systems with 70 full-service online public services that are 100% integrated with the National Public Service Portal, plus data connectivity between agencies, social insurance programs continue to be processed fully and on time.

However, the compliance burden for administrative procedures during the transition period falls squarely on businesses. Incorrect or delayed implementation can seriously disrupt business operations and negatively impact employee rights. To understand the 2024 compliance landscape in Vietnam, businesses need to stay current with other important deadlines.

To ensure the transition goes smoothly with full compliance, having a partner who deeply understands Vietnamese regulations is crucial. When selecting compliance service providers, businesses need to carefully evaluate capabilities and hands-on experience. Talentnet’s compliance consulting services can help your business navigate these complex changes, from document preparation to working with social insurance agencies, ensuring your business operations continue without interruption.