The General Law on Social Insurance (“GSI law”) was approved by the Mongolian Parliament on July 7, 2023, and it will take the place of the Law on Social Insurance (1994) as of January 1, 2024. The law intends to enhance the administration and structure of the social insurance and pension systems , and control late payments and report resubmissions, among other things.
In this blog we will share an overview of key changes of the GSI Law and certain amendments to recognize for businesses and employers.
Under the new Law, the following amendments were made to expand the coverage of social insurance, to move from the distribution system to a semiconducting system, to reduce future losses in the insurance fund, and to initiate actual collection of pension insurance funds.
– From 2030, the insurer will be able to spend monetary asset from initial account on education, health care and mortgage repayments;
– A certain amount of the monetary assets from the initial account will be inherited by the insurer’s legal heirs;
– The government will pay for the insurance contribution of parents who has a child under medical supervision and permanent care;
– The maximum monthly income for voluntary social insurance is equivalent to an increase of 7 times that of the minimum wage rate.
Additionally, it should be noted that the following changes were made in relation to rights and obligations of the employers and businesses.
– the social insurance contribution to pay from an employer is slightly changed. The rate of manufacturing accidents and occupational-related disease insurance was reduced to 0.5-2.5 insurance and the rate of unemployment insurance increased as 0.5;
– An employer shall have the obligation to compensate and employee for social insurance contribution if it is found that an employer has not paid the income of social insurance for a period, has hidden, reduced rates, underpaid, and wrongly dismissed by employee.
– employees who are working for another employer under employment contract in addition to their full-time principal employer or under the contract shall be insured compulsorily for only pension insurance;
– foreign entities earning a source of income from Mongolia are obliged to pay and report social insurance contribution.