Doctor Phan Thanh Hai, who turns 65 this year, conducts an ultrasound scan for a patient at the Medical Diagnosis Center in Ho Chi Minh City. PHOTO COURTESY OF TUOI TRE
Vietnam may gradually raise its retirement age to 62 for men and 60 for women to avert a possible bankruptcy of its pension system in the next two decades.
A four-month annual increase in the retirement age may begin with state employees in 2016 and extend to others in 2020, Tuoi Tre (Youth) newspaper quoted Tran Dinh Lieu, head of the Vietnam Social Security’s collection section as saying on Monday.
Those who engage in heavy and hazardous jobs, meanwhile, would be allowed to continue to retire at the current age at 60 for men and 55 for women, he said.
The draft revision to the Social Insurance Law, will be submitted to the National Assembly -- Vietnam's legislature – for approval at the end of this year.
The Ministry of Labor, Invalids and Social Affairs has said 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, it said.
In other words, male employees now 39 or younger and female employees under 34 wouldn't receive pensions when they retire.
Carlos Galian, a social security expert at the International Labour Organization (ILO) in Vietnam said that as the overall health of Vietnamese retirees improves, it's only reasonable to lift the retirement age.
In a recent interview with Thoi bao Kinh te Saigon (Saigon Times) newspaper, Galian said the average lifespan in Vietnam increased from 66 in 1990 to 75 at present.
He further cited a Vietnam Social Security report as saying that in 2012 about 40 percent of retirement age people continued to work until they reach 65, though many of them don't work full-time.
Meanwhile, around 70 percent of laborers in the informal sector continue to work (with more time off) after the age of 65.
Another twenty-five percent continued working as they always had.
This meant that many present-day retirees are still capable of working, said Galian.
The ILO expert also said that a plan to raise the retirement age gels with developments in the labor market given that the number of young employees joining the market every year may fall to 350,000 in the 2019-2029 period from 700,000 at the moment.
Around 6.2 percent of Vietnam’s 90-million people are 65 years old and above.