(amended according to the Laws of 22 January 1996,
16 January 1997 and 10 June 1999)

CHAPTER ONE

General Provisions

Article 1. Purpose Of The Law

The purpose of this Law is to determine the branches of social insurance, its forms and scope of coverage, to set out a legal basis for insurability and liability for contributions, constitution of a Social Insurance Fund and disbursement, as well as operations of the Social Insurance Organization and its inspectors in respect of implementation.

Article 2. Legislation On Social Insurance

1. The legislation on social insurance comprises the Constitution, the Law under discussion, as well as other legislative Acts issued in conformity with thereto.

2. Where an international agreement of Mongolia states otherwise than the social insurance legislation, the provisions of the international agreement shall be complied with.

Article 3. Social Insurance And Its Branches

1. The social insurance is a socio-economic measure to provide pensions, benefits or payments prescribed in the legislation to the insured person in contingencies of retirement, disability, sickness and unemployment, as well as his/or her dependents in case of the insured person’s death, having established a Social Insurance Fund through contributions payable by individuals (further referred to as "insured persons"), State institutions, business units and organizations according to the applicable procedures.

2. The social insurance shall consist of the following branches:

1/ pension insurance;
2/ benefits insurance;
3/ health insurance;
4/ insurance against employment injury and occupational diseases;
5/ unemployment insurance.

Article 4. Forms Of The Social Insurance & Its Coverage

1. The social insurance shall have compulsory and voluntary coverage.

2. Workers contracted in employment with a business unit, organization or individual /further referred to as "employer"/ and civil servants shall be compulsorily covered by social insurance, unless it is stipulated otherwise in the legislation. Herdsmen, contracted in employment with a business unit, organization or individual shall be treated as "contracted workers" designated in this section.

3. Individuals engaged in production, business or services except those specified in Section 2 of this Article shall make their own decision on whether to be insured or what branch to choose according to the requirements and procedures stipulated in this Law.

4. Foreigners and stateless persons permanently residing in Mongolia and employed by a local organization, as well as Mongolian citizens employed by a foreign organization or business unit operating on the territory of Mongolia shall be covered by the social insurance legislation, unless it is stipulated otherwise in the international agreement of Mongolia.

5. Conditions and procedures respecting the compulsory coverage of self-employed and cattle-breeders by social insurance can be regulated by law.

Article 5. Policy Of Social Insurance Coverage

Persons being described in Section 3, Article 4 of this Law shall conclude a policy with the insurer according to the conditions and procedures stipulated in this Law.

Article 6. Eligibility For Pensions And Benefits Provided By The Fund Of Social Insurance

1. Individuals covered by social insurance and contributed to the scheme according to the requirements and procedures set out in the legislation of social insurance shall be eligible for the pensions and benefits prescribed in the Law.

2. Non-payment of social insurance contributions due to the employer's fault shall not serve as justification for disqualifying an insured person or members of his/or her family for the receipt of a pension or benefit.

3. The requirements for disqualifying for the receipt of a certain type of pensions, benefits or payments provided by the Fund of Social Insurance can be determined by law.

Article 7. To Choose Pensions Or Benefits Provided By The Fund Of Social Insurance

There shall be no duplication of a pension or benefit payable to an insured person from the same branch fund of social insurance. In the occurrence of duplication, the insured person has the right to choose one of them.

Article 8. Decision On Pension And Benefit Payments
1. The decision on payment of pensions and benefits shall be made by the Social Insurance Organization on the basis of the claim of an insured person and other documents stated in the Law.

2. The time limit for considering claims shall be determined by Law.

CHAPTER TWO

Fund Of Social Insurance

Article 9. Branches Of The Fund Of Social Insurance

Each branch of social insurance shall have a separate cash fund as follows:

1/ pension insurance fund;

2/ benefits insurance fund;

3/ health insurance fund;

4/ insurance fund for employment injury and occupational diseases;

5/ unemployment insurance fund.

Article 10. Receipts Of The Fund Of Social Insurance

1. The receipts of Fund of Social Insurance shall consist of the following sources:

1/ social insurance contributions payable by the insured ;

2/ social insurance contributions payable by employers;

3/ bank deposit interest on the fund's surplus

4/ fines imposed for late payment of social insurance contributions;

5/ transfers from the State general budget;

6/ other sources.

2. The receipts of the Fund of Social Insurance shall be exempted from various types of taxes and charges.

Article 11. Disbursement Of The Social Insurance Funds

1. The receipts of the Social Insurance Fund shall be disbursed for the following purposes according to the requirements and procedures, stipulated in the legislation;

1/ paying out pensions and benefits;

2/ financing the social insurance administrative costs;

3/ financing other payments and expenses, stated in the legislation.

2. It is prohibited to transfer resources from one branch fund to another for disbursement and use for purposes not assigned or deposit it improperly, unless it is stipulated otherwise in the legislation.


Article 12. Approval Of The Budget On Receipts & Expenditure Of The Fund Of Social Insurance

1. The annual budget for receipts and expenditure of each branch fund of social insurance shall be worked out by the Social Insurance Central Organization with consideration given to the proposals of local social insurance organizations, and shall be approved by the Social Insurance National Council(further referred to as “National Council”).

2. The transfers from the State general budget to a particular branch fund of social insurance for the purpose of paying pensions and benefits according to the promises assumed prior to the enforcement of this Law shall be determined annually by the Budget Law.

3. The Ministry of Finance shall transfer the sum approved in accordance with Section 2 of this Article to the relevant fund in the first 10 days of each month according to the monthly schedule.

Article 13. Preparation Of Balance Sheet And Report On The Fund Of Social Insurance

1. The Social Insurance Central Organization shall retain control over the receipts and expenditure of each branch fund of social insurance and prepare a consolidated report and balance sheet quarterly and annually, and forward it to the National Council within the time limits given below:

1/ The social insurance organizations in soums and districts shall report on receipts and expenditure of each branch fund of social insurance to the social insurance organizations in relevant aimags and the Capital city prior to the 15th of the following month, and the social insurance organizations of aimags and the Capital city shall report to the Social Insurance Central Organization prior to the 25th of the following month;

2/ The Social Insurance Central Organization shall submit to the National Council the quarterly consolidated report on each branch fund of social insurance prior to the 10th of the second month following quarter; and the annual report containing suggestions and conclusions prior to the 25th of February following year;

3/ The National Council shall review and discuss the quarterly consolidated report prior to the 10th of the last month following quarter, and the annual report prior to the end of the first quarter following year.

2. The un-disbursed receipts of each branch fund of social insurance (surplus), in case of emergencies, may be pooled once quarterly into the fund of the same branch by the relevant social insurance organization of a higher instance. Where there is a need to carry the surplus for disbursement over to the following month or quarter, permission should be obtained from the relevant social insurance organization of a higher instance.

Article 14. Records And Reports On The Fund Of Social Insurance

1. The local social insurance organizations shall record contributions paid to the various branch funds of social insurance by each employer and insured person based on social insurance booklets or certificates issued to each of them.

2. The initial recording form for pooling resources into and paying out of the Fund of Social Insurance, the procedures for recording and reporting shall be approved by the Government member in charge of social insurance.


CHAPTER THREE

Social Insurance Contributions

Article 15. Rate Of Social Insurance Contributions And Payment Schedule

1.Employees and employers covered under Section 2, Article 4 of this Law shall pay social insurance contributions monthly at the following rate:

Branches of Insurance Rate of Contributions (percentage)

Employer Payroll & Similar Earnings Employee Payroll & Similar Earnings

Pension insurance 13.5 5.5

Benefits insurance 1.0 1.0

Insurance against employment & occupational diseases 1.0, 2.0 or 3.0

Unemployment 0.5 0.5

2. The minimum of social insurance contributions payable monthly by a person covered under Section 3, Article 4 of this Law shall not be less than the amount calculated at the following rate from the minimum wage approved by the Government for a given period:

1/ pension insurance 9.5%

2/ benefits insurance 1.0%

3/ insurance against
employment injury and 1.0%
occupational diseases

3. The rate of health insurance contributions (premium) shall be determined by the Civil Health Insurance Law.

4. Employer shall solely pay contributions for insurance against employment injury and occupational diseases of a person covered under Section 2, Article 4 of this Law.

5. Based on the Social Insurance National Council's suggestion, the Government shall approve the list of employers who will pay contributions for insurance against employment injury and occupational diseases at a different rate subject to satisfaction of the requirements for occupational safety and health, specified in Section 1 of this Article.

6. Based on the Social Insurance National Council's suggestion, the Government shall determine the list of jobs and occupations where working condition factors affecting employees' health are found to be impossible to be resolved in the existing framework of labor safety requirements, also jobs and occupations involved in hot or underground working conditions.


Article 16. Procedure For Paying Social Insurance Contributions

1. Employer shall deduct social insurance contributions from the insured’s wages or similar thereto earnings upon each payment at the rate specified in Section 1, Article 15 of this Law, and shall transfer the sum to the social insurance organization's general bank account in the course of a current month.

2. Contributions shall be reconciled on the basis of contributions schedules and contributions forms providing information on employer's payroll or similar thereto earnings and employees’ wages or similar thereto earnings, and payments shall be made by cheque. Persons covered under Section 3, Article 4 of this Law can pay contributions in cash.

3. The current monthly contributions of employees and employers covered under Section 2, Article 4 of this Law shall be paid prior to the 5th of the following month. The time limits for paying contributions and reporting shall be the same for all branches of social insurance. Where the time limit coincides with a weekend or public holiday, contributions shall be paid and the report shall be submitted to on the following working day.

4. Contributions of employees covered under Section 2, Article 4 of this Law shall be reconciled by the accountant of a relevant business unit or entity, whereas the contributions of persons covered under Section 3 of this Article shall be reconciled by the staff of a social insurance organization.

5. An international and foreign organization or business entity involved in any activity on the territory of Mongolia employing Mongolian citizens shall pay contributions on their behalf to the relevant local social insurance office in conformity with the rate and procedures specified in Section 1 of Article 15 and Sections 1,2,3,4 of Article 16 of this Law.

6. Persons covered under Section 3, Article 4 of this Law shall pay their contributions according to the policy concluded with the insurer.

Article 17. Employer And Employee's Liability For Contributions

1. Employers and employees covered under Section 2, Article 4 of this Law shall assume the following liabilities for contributions:

1/ to define honestly and accurately the payroll and similar thereto earnings and contribution dues and make payments within a prescribed time limit;

2/ to prepare an account of and report on contribution dues and payments within a prescribed time limit and forward it to the Social Insurance Organization;

3/ to maintain social insurance initial and accountancy records in compliance with the established procedure and prepare a report and balance sheet;

4/ to meet the legitimate demands of a competent body or official to extinguish an offense in the event of non-compliance with the legislation.

2. Persons covered under Section 3, Article 4 of this Law shall be liable for social insurance contributions as stipulated in the policy concluded with the insurer.

Article 18. Cessation Of Contributions Liability, Its Transfer To Another Person, And Suspension

1. Contributions liability ceases under the following circumstances:

1/ in case of the insured person’s death;

2/ employer's dissolution or bankruptcy;

3/ expiration of the insurance policy term;

4/ termination of the employment contract.

2. Where occurs employer's merger, split or any other form of institutional transformation, the liability for contributions shall transfer to the newly emerged entity.

3. As stipulated in Paragraph 5, Article 19 of this Law, the appeal of an insured person shall not be a reason for suspending or ceasing contributions liability. It can be suspended exclusively by the decision of a relevant court reviewing the case.

4. In case of employer's bankruptcy or dissolution for other motivations, the Dissolution Commission or the Creditors Council shall recover the unpaid contributions from the employer's assets according to the procedure stipulated in the Law and pay into the relevant social insurance fund.

Article 19. Employer And The Insured’s Right With Respect To Contributions Liability

The employer and insured shall exercise the following right with respect to paying contributions:

1/ to look into the report on inspection made by the Social Insurance Organization /inspector/ and make comments, if necessary;

2/ to get commented or make comments on the contribution dues, its payment and conclusions of inspection;

3/ to get reimbursed for losses caused due to the fault of the Social Insurance Organization or its official according to the procedure stipulated in the Law;

4/ to recover sums exceeding contribution dues or get it deducted from the following contribution dues;

5/ to forward to the competent body or official of a higher instance an appeal against the misconduct or decision of a Social Insurance Organization and its officials, and lodge it with court, if disagrees with the decision.

Article 20. Liabilities

1. Where non-compliance with the social insurance legislation is not subjected to a criminal prosecution, social insurance contributors shall be liable for with the following:

1/ Any employer who conceals or willfully reduces insurable payroll or similar thereto earnings by reason of contributions liability shall remit the contributions arrears resulting from the concealed or reduced amount of earnings, as well as face a penalty equal to this amount;

2/ The contributions outstanding due to under or late payment shall be remitted and 0.3 per cent penalty of the total amount of arrears shall be imposed per each day of delay;

3/ The underpaid contributions arrears caused by miscalculation shall be remitted, 0.1 per cent penalty of the amount outstanding shall be imposed per each day from the date on which miscalculation was made, but the total amount of a penalty shall not exceed 30 per cent of the underpaid contributions;

4/ other liabilities stipulated in the legislation.

2. Sums obtained by way of a pension, benefit or payment without reasonable grounds through compiling false documents and misrepresenting information, or excessive entitlements shall be remitted and the offender shall be fined to 25,000-50,000 tugrug.

3. In the event of non-payment of pensions and benefits in due time, the faulted bank, financial or social insurance institution shall remit the penalty per each day of delay calculated from the monthly benefit amount at the interest rate of termed savings for a given period of the bank providing service to the beneficiaries, and the guilty official shall meet a fine of 25,000-50,000 tugrug.

4. Paragraph 2, Section 1 and Sections 2,3 of this Article shall be applicable to persons covered under Section 3, Article 4 of this Law.

CHAPTER FOUR

Social Insurance Organization

Article 21. Social Insurance Organization's Chart

1. The Social Insurance Organization’s chart shall comprise the social insurance central office (State Social Insurance General Office), local offices and units (representative or inspector).

2. There shall be a Dispute Settlement Council /non staff/ operating under the social insurance central and local offices to review disputes arising between employer and an insured person on the one hand and a social insurance organization on the other hand.

3. Regulations on the Social Insurance Organization and the Council mentioned in Section 2 of this Article shall be approved by the Government.

Article 22. Administration Of Social Insurance Organization

1. The social insurance central office shall operate under the authority of a Government member in charge of social insurance issues and the local offices under the authority of governors of a relevant level, as well as the social insurance office of a higher instance.

2. The social insurance central office shall provide the local offices with technical and methodological guidance.

3. The chairman of the social insurance central office shall be appointed by the Government member responsible for social insurance issues in consultation with the Social Insurance National Council, and the chairman of a local office shall be appointed by the chairman of a social insurance office of a higher instance in consultation with the governor of a relevant level.

Article 23. Operational Principle Of The Social Insurance Organization And Its Inspector

The Social Insurance Organization shall uphold a principle for self-financing and the social insurance inspector shall esteem legislation, escape other's influence, respect and protect the legitimate rights and interests of the insured and employer.

Article 24. Responsibilities Of The Social Insurance Organization

The Social Insurance Organization shall exercise the following main responsibilities:

1/ to arrange the implementation of the social insurance legislation;

2/ to set up the Social Insurance Fund and ensure its performance on receipts & expenditure;

3/ to arrange timely payment of pensions and benefits out of the relevant branch fund of social
insurance and to improve services;

4/ to conduct studies on upgrading of the national social insurance system, its operations and forms, to prepare proposals and take decisions or forward them to the competent body for solution;

5/ to monitor the operations of offices at a lower instance;

6/ other responsibilities stipulated by the legislation.

Article 25. Authorities Of The Social Insurance Organization

1. The Social Insurance Organization shall have the following authorities:

1/ to levy contributions on employer whose payroll and similar thereto earnings are impossible to be determined due to the absence of initial and accountancy records, basing on the precedent of another employer engaged in similar production and services;

2/ to temporarily suspend expenditure transactions of the employer's bank account who failed to pay contributions in due time, until contributions payment accomplishes;

3/ to recover, in compliance with the relevant provision of legislation, the amount equal to contributions arrears, fines, interest and penalties not paid in due time as indicated in the account presented by a social insurance inspector;

4/ to settle overpaid contributions in the course of reconciliation of contributions for the following month, quarter or year, or remitting the overpaid contributions to the insured person on request in the course of 30 days following reconciliation.

5/ to enforce liability, as prescribed in the Law, for employer avoiding payment of contributions, arrears, interest and penalties or failing to send contributions schedules in time, and to undertake actions to extinguish offenses detected in the course of the Social Insurance Organization’s inspection;

6/ to annul or revise the decision made by the social insurance organization of a lower instance, if it is found unreasonable;

7/ to obtain free of charge from employer and an insured person information, surveys and other relevant documents for social insurance inspection purposes.


Article 26. Social Insurance Inspector's Rights and Duties

1. An official, highly experienced and qualified, having worked with the Social Insurance Organization for not less than three years shall be empowered as a social insurance inspector at the decision of the Government member in charge of social insurance issues, based on the proposal of the social insurance central office.

The rules for social insurance inspectors shall be approved by the Government.

2. Social insurance inspectors shall exercise the following rights:

1/ to examine and check accounts, balance sheets and other financial documents related to contribution dues and payment, to obtain comments and references;

2/ to obtain from the employer's bank and financial institutions copies of certificates and documents required exclusively for social insurance auditing free of charge;

3/ to attach temporarily from employer and an insured person documents evidencing the fact of concealing insurable earnings and to get a copy of them;

4/ to remit the appropriate sum of unpaid contributions from the employer's assets where employer fails to deduct contributions from wages or similar thereto earnings and pay into the Fund of Social Insurance;

5/ to enforce employer and the insured to comply with this Law;

6/ to inform the relevant organization of misconducts of employer or an insured person detected in execution of official duties.

3. Any social insurance inspector, who fails to properly discharge his official duties by concealing misconducts related to payment of contributions and utilization of contributions for private purposes, being involved in bribery or having misused his rights, shall meet disciplinary, administrative, material and criminal liabilities designated in the legislation.

Article 27. Social Insurance National Council

1. The Parliament shall set up the Social Insurance National Council for operation, consisting of non-staff members equally representing the Government, insured and employer. The National Council reports to the Parliament.

2. The chairman and members of the Social Insurance National Council shall be appointed by the Parliament at the recommendation of involved parties for a term of six years. The National Council shall have the following composition:

1) One person from the Ministries of Finance, Justice and State Administrative Central Body Responsible for Labor each as Government representatives;
2) Three persons from trade unions representing the rights and legitimate interests of majority of employees;
3) Three employer representatives.

The chairman of social insurance central organization will be an independent member of the National Council.

The deputy chairman of the National Council will be appointed from one of the parties’ representatives for a term of two years by the chairman of National Council in consultancy with three parties.

3. The National Council shall execute the following authorities:

1/ to elaborate recommendations on improvement of social insurance legislation, its system and operations, and increase of pension benefits and get them resolved by a relevant body;

2/ to discuss and approve the projections of receipts and performance on disbursement of the Social Insurance Fund;

3/ to supervise the implementation of social insurance legislation and the receipts & expenditure of the Fund of Social Insurance;

4/ to get briefed and discuss repots of the Social Insurance Organization on social insurance activities, staffing and funding, to evaluate and take appropriate measures;

5/ to review and evaluate the status of hardware, software and services in Social Insurance Organization;

6/ to approve social insurance central organization’s scheme, operational and investment budgets, and monitor over its execution;

7/ to work out procedures and recommendations on social insurance issues;

8/ to upgrade and monitor activities of Medical Labor Accreditation Commission and Dispute Settlement Council;

9/ to handle suggestions and appeals of individuals regarding issues of social insurance and medical labor accreditation;

10/ other authorities stipulated by legislation.

4. Regulations on the National Council shall be approved by the relevant Parliamentary Standing Committee.

5. A salary increment can be granted to a member of the National Council in dependence of his participation in work. The maximum of this increment shall be determined by the Government on the basis of the proposal forwarded by the State Central Administrative Body in charge of social insurance matters.

CHAPTER FIVE

Medical Labor Accreditation

Article 28. Concept Of Medical Labor Accreditation

Medical labor accreditation is a professional activity to identify causes of disability (full or partial loss of capacity for work) due to a loss of mental, sensory or physical normal functions and to determine its percentage and length.

Article 29. Body Responsible For Medical Labor Accreditation

1. Medical labor accreditation shall be defined by the Medical Labor Accreditation Commission consisting of specialized physicians and representatives of organizations protecting interests of social insurance, employer and the insured.

2. The Medical Labor Accreditation Commission shall determine the percentage and length of the loss of working capacity of an insured person resulted from a conventional disease and injury, or
employment injury and occupational disease.

3. The Medical Labor Accreditation Central Commission shall operate under the social insurance central organization and medical labor accreditation local commissions under the social insurance organizations of aimags and districts of the Capital city. Medical labor accreditation commissions can be set up in soums.

4. Regulations on the Medical Labor Accreditation Commission shall be approved by the Government.

CHAPTER SIX

Other Provisions

Article 30. Social Insurance Documents

1. Each insured person shall have a social insurance booklet with a national registration number.

2. Employers legally registered with central and local taxation agencies who are contributing to the scheme shall be provided with a social insurance certificate with a national number.

Article 30. Individual Pension Insurance Contribution Account

1. Contributors born on January 1, 1960 and later shall have an individual pension insurance contribution account established for them.

2. The relations of individual pension insurance contribution accounts shall be regulated by law.

Article 31. Funding Of The Social Insurance Administrative Costs

1. The social insurance administrative costs shall be funded from the receipts of social insurance contributions.

2. The norms for funding the social insurance administrative costs from the social insurance contribution receipts shall be determined by the Parliament.

Article 32. Determination Of The Average Of Wages And Similar Thereto Earnings

The Government shall specify the procedure for determination of the average wages or similar thereto earnings, and ceiling for the purposes of contributions, pensions and benefits.

Article 33. Control Over The Implementation Of The Social Insurance Legislation

The control over the implementation of the social insurance legislation shall be executed by the Government, governors of a various level and other bodies or officials authorized by legislation according to the powers respectively.