Vietnam urged to boost retirement age to save pension fund

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Vietnam's population is aging quickly, which is threatening the solvency of its pension fund. Photo courtesy of Thoi Bao Kinh Te Saigon Online

The International Labor Organization has recommended Vietnam raise its retirement age by five years to prevent pension fund shortages in the next decade.

ILO representatives said at a meeting with Vietnam's labor ministry Thursday that the country's social insurance fund is likely to lack money by 2021 and run dry by 2034, unless there are changes in labor policy, Thoi Bai Kinh Te Saigon Online reported.

Gyorgy Sziraczki, country director of the organization, said social insurance reforms should not wait until the last minute.

The ILO suggested both men and women in Vietnam should not retire until age 65, given that the average lifespan in Vietnam has increased (from 40 in 1960 to 73 in 2010).

Vietnam's current retirement age is 60 for men and 55 for women, but health and social officials said last February that they should retire at the same age to guarantee gender equality in career opportunities, and also to reduce expenses for the state's pension fund, which currently lacks the money to pay retirees until they die.

United Nations' statistics compiled in more than 141 countries showed that two-thirds of them have the same retirement age for both genders.

Pham Minh Huan, vice minister of Labor, Invalids and Social Affairs, also said at the meeting that Vietnam's population is aging, possibly among the fastest in Asia between 2020 and 2050.

Huan said Vietnam entered the older age bracket in 2012, five years earlier than expected, when people above 60 years of age began accounting for more than 10 percent of the population.

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The labor organization also urged Vietnam to increase the coverage of its retirement plan.

Current regulations allow people employed for at least three months to obtain social insurance and receive pensions later, but only one fifth of the country's workforce have been registered for the insurance, according to figures by the Ministry of Labor, Invalids and Social Affairs at the meeting.

Though only 47 percent of employers obligated to do so have been making payments to the social insurance fund, its income increased from VND6.3 trillion in 2001 to VND89.6 trillion in 2012

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