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Official Gazette

Thursday, December 14, 2017

Higher retirement age, lower pension proposed

Updated: 15:36’ - 03/07/2014

Retirement ages could be raised while pensions might be lowered, if draft amendments to the Law on Social Insurance prepared by the Ministry of Labor, War Invalids and Social Affairs is approved.

As proposed by the ministry, from 2015, pensions for retired state employees will be calculated like those for employees of the non-state sector. This means that pensions will be calculated based on the average of their salaries throughout the period of paying social insurance premiums, instead of the average of their salaries in ten years preceding the year of retirement as currently prescribed, thus lowering pensions for many.

The ministry also suggests a roadmap for raising retirement ages to be applied to state employees from 2016, and the non-state sector from 2020. Specifically, the retirement age will annually increase by four months until it reaches 62 for men or 60 for women. Under current regulations, men retire at the age of 60, while retirement age for women is 55. 

Pham Minh Huan, Deputy Minister of Labor, War Invalids and Social Affairs, said the proposed changes in retirement ages and pensions were to ensure fairness for all social insurance premium payers and help balance the pension fund in the long term.

“Current regulations have resulted in an imbalance in social insurance and pension payments,” he commented.

However, public opinions remain divergent on these issues.

Mai Duc Chinh, Vice President of the Vietnam General Confederation of Labor commented that as social insurance constitutes a social security policy, top priority must be placed on health and benefits of laborers, especially those working in the non-state sector.

The draft, therefore, should devise an appropriate roadmap for increasing retirement ages rather than regarding it as a decisive solution.

The International Labor Organization has once suggested that Vietnam increase retirement ages so as to prolong the social insurance premium payment period but it also recommended that social insurance premiums must be calculated based on actual income rather than minimum wages.

According to international experts, the balance of the social insurance fund can be ensured only when functional agencies adopt solutions to increase the number of social insurance premium payers and effectively handle social insurance frauds.-  



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