Vietnam's retirement age should be raised by two to five years to prevent the country's pension fund from going bankrupt, according to a recent government proposal.
The proposal called for a four-month annual increase in the retirement age until it hits 62 years for men and 60 for women. It was submitted to the Standing Committee of the National Assembly, Vietnam's legislature, on Friday, Tuoi Tre (Youth) newspaper reported.
Vietnam’s current retirement age is 60 for men and 55 for women.
The adjustment, which was proposed to begin with state employees in 2016 and extend to others in 2020, was part of a draft revision to the Social Insurance Law.
Pham Thi Hai Chuyen, Minister of Labor, Invalids and Social Affairs, was quoted as saying that under current policies the pension fund will fall short of its obligations in 2021.
The shortfall could be resolved by tapping into previous years’ surplus, but that would run out by 2034, she said.
According to the minister, the current rate of social insurance contributions (which feed the pension fund) are low; moreover, the contribution period is short, and the ratio of payers to receivers is low too.
In 1996, there was one pensioner for every 217 social insurance payers, but that rate plummeted to one to 9.3 in 2012.
Since the Social Insurance Law took effect seven years ago, only 20 percent of Vietnam's labor force have paid into the fund, according to a report by the parliamentary Social Affairs Committee.
Under Vietnam’s existing law, social insurance premiums account for 26 percent of one’s monthly salary, of which the employee contributes 8 percent and the employer the rest.
In Thailand, the rate of contributions to the social insurance fund is 12.75 percent, of which employees and employers pay 5 percent and the government the rest.
Phung Quoc Hien, chairman of the parliamentary Finance and Budget Committee, agreed with the government’s proposal, saying an increase in the retirement age is "inevitable," the newspaper reported.
However, Mai Duc Chinh, vice chairman of the Vietnam General Confederation of Labor, feared that people in fields like rubber cultivation, teaching, and footwear manufacturing are not in good enough health to work beyond the age of 60.
The bill was expected to be discussed at the upcoming session of the National Assembly this May.
Last month, Nielsen, an information and measurement company, released a survey about aging in 60 countries, showing that 41 percent of Vietnamese respondents plan to retire between the age 60 and 65, and 40 percent prefer to retire before 59.
Around 6.2 percent of Vietnam’s 90-million population are 65 years old and above.
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