The proposal to raise the retirement age is unconvincing.

The proposal to increase the retirement age for women to 60 and men to 62 continued to receive opposition at the workshop "Reforming pension insurance policies: international experiences and proposals and recommendations for drafting the revised Social Insurance Law".

Receiving pension in Hanoi - Photo: Ngoc Thang

According to the government's presentation at a workshop organized by the National Assembly's Committee on Social Affairs in Hanoi on the evening of May 27th, the pension and death benefit fund is at risk of imbalance in the near future. In 2007, the ratio of expenditures to revenues was only 57.2%, but this figure rose to 73.7% in 2008, 76.3% in 2010, and is estimated to reach 76.6% in 2013. To avoid the collapse of the Social Insurance Fund, the government proposed that from 2016 onwards, the age requirement for receiving a pension for officials, civil servants, and public employees should increase by 4 months each year until it reaches 60 years old for women and 62 years old for men. From 2020 onwards, the age requirement for receiving a pension for the remaining groups will increase by 4 months each year, until it reaches 60 years old for women and 62 years old for men.

Workers disagree

Regarding the explanation of raising the retirement age to balance the fund, Mr. Dang Nhu Loi, former Deputy Chairman of the Committee on Social Affairs, argued that the draft only focuses on balancing the fund through pension calculations, without considering other consequences. The risk of imbalance in the pension fund is real, but the analysis and assessment are inaccurate, lacking in root causes, unclear, and indistinct, leading to reactive and superficial solutions.

Mr. Loi cited: “The pension insurance contribution rate in 2012-2013 was 20%, and from 2014 onwards it was 22%. Thus, the total mandatory social insurance, health insurance, and unemployment insurance contributions in Vietnam amount to 35% of the worker's salary. The pension insurance contribution rate alone is not low compared to many countries around the world, including some developed countries (South Korea contributes 9% of actual salary, Thailand 6% of salary). Therefore, the assertion that the contribution-benefit imbalance is due to the low pension fund contribution rate is not entirely accurate and lacks depth.”

Disagreeing with the proposed plan, Mr. Mai Duc Chinh, Vice President of the Vietnam General Confederation of Labor, stated that the vast majority of workers surveyed by the Confederation disagreed with raising the retirement age, especially female workers. “The 2012 Labor Code, which only came into effect on May 1, 2013, already stipulates the retirement age for workers as 60 for men and 55 for women. Now, the draft Social Insurance Law proposes increasing the age requirement for receiving a pension, which is inappropriate. I suggest that the retirement age should depend on the occupation of the worker and should be implemented in accordance with Article 187 of the Labor Code,” Mr. Chinh emphasized.

Large fund losses

Representative Nguyen Ba Thuyen (Lam Dong) questioned: "On what basis was the increase of 4 months per year determined?"

Some delegates suggested that instead of raising the retirement age, other solutions should be considered.

Mr. Mai Duc Chinh stated that the number of employees required to participate in social insurance is currently unknown, only the number of employees participating is based on declarations from businesses. According to the Social Insurance agency, there are approximately 16 million workers employed in businesses, but only 10.6 million are currently participating in mandatory social insurance (including civil servants and public employees in the administrative and public service sector). This means that over 5 million employees are still not participating in social insurance, corresponding to an estimated loss of approximately 56,000 billion VND per year in social insurance and health insurance contributions. This represents a significant loss directly impacting the Social Insurance Fund and the rights of employees. Meanwhile, the situation of businesses delaying or defaulting on social insurance contributions is quite common and increasing, affecting the fund's revenue and the rights of employees. The amount of outstanding social insurance contributions as of April 30, 2014, according to the Social Insurance agency, was 12,451 billion VND.

From the perspective of the drafting agency, Ms. Pham Thi Hai Chuyen, Minister of Labor, Invalids and Social Affairs, stated: “The impact of the retirement age on the labor market, to say it has no impact is incorrect, but the impact is negligible because it only increases by 4 months per year. According to this draft law, the increase in retirement age will not be immediate; it will take another 15 years to reach the retirement age of 60 for women and 6 years for men.” According to Ms. Chuyen, the National Assembly will leave the decision on increasing the retirement age to the Government. Regarding those working in arduous and hazardous environments, Ms. Chuyen promised to incorporate feedback and refine the draft law to ensure the principle of conditional contribution and benefit is feasible.

According to Thanh Nien newspaper