Don't think that increasing the retirement age is a form of power-hungry behavior.

According to statistics from the Ministry of Labor, Invalids and Social Affairs, the proportion of elderly people in Vietnam is increasing rapidly, from 6.9% of the population in 1979 to 10.5% of the population today. When submitting the Social Insurance Law 2014, the Ministry of Labor, Invalids and Social Affairs also proposed increasing the retirement age by 2 years, but it was not approved by the National Assembly.

It is expected that in 2017, when submitting the revised Labor Code to the National Assembly, the Ministry of Labor, Invalids and Social Affairs will continue to submit a plan to increase the retirement age. This solution is to respond to the risk of imbalance in the Social Insurance Fund and the increasingly rapid aging of the population...

However, there are many opinions surrounding this story. In this week's Sunday Chat column, PV had a discussion with Associate Professor, Dr. Nguyen Thi Lan Huong, former Director of the Institute of Labor Science and Social Affairs (ILSSA) about this issue.

PV:Dear Associate Professor, Dr. Nguyen Thi Lan Huong, it is expected that the Ministry of Labor, Invalids and Social Affairs will propose a plan to increase the retirement age when submitting the revised Labor Code to the National Assembly. As someone who has worked for many years in labor and employment research, how do you think this proposal to increase the retirement age will be explained?

Associate Professor, Dr. Nguyen Thi Lan Huong:The model of men retiring at 60 and women retiring at 55 has been applied for a long time, but since applying that model, our average life expectancy is still very low. How do they relate to each other? During the time that person works, pays social insurance, after retirement, receives social insurance. Suppose everything remains the same, but the average life expectancy increases (because this pension policy has been applied since the average life expectancy was 60, now it has increased to 73 years old). Life expectancy increases by 13 years, but the contribution level is still the same, where will the money come from to pay social insurance? Therefore, from the perspective of the Social Insurance Fund, there must be a correlation of time.

Associate Professor, Dr. Nguyen Thi Lan Huong.

PV:This means that the aging population is strongly affecting the Social Security Fund, causing the fund to lose its revenue and expenditure balance. Can you elaborate on this impact?

Associate Professor, Dr. Nguyen Thi Lan Huong: Our social insurance fund is a mixed revenue and expenditure fund, meaning that the money paid by young people supports retired people. Previously, since the 1960s, 25 people paid for 1 beneficiary. As the population ages, the proportion of young people decreases, the proportion of old people increases, it is expected that by 2040, our country will officially enter the process of population aging with the proportion of old people in the total population aged 60 and over accounting for 25%. This is according to forecasts, meaning that the model was previously 25 people paid for 1 beneficiary, now it has decreased to 9 people paid for 1 beneficiary, by 2040 it will be 2 people paid for 1 beneficiary. With such an aging population model, if the retirement age is not adjusted, where will you get the money to give all retirees a pension?

PV:Discussing the story of paying social insurance to receive pension. According to what you said, it is predicted that by 2040, due to the aging population, 2 people will pay for 1 person to receive. Many people are arguing that retirees themselves have paid. When they retire, they will receive the part they have paid?

Associate Professor, Dr. Nguyen Thi Lan Huong:This thinking stems from the fact that many people do not understand clearly about pensions and our current social insurance fund. Our fund is a collection and disbursement fund. Employees pay 30% of their average salary, but when they retire, they receive 75% of their average salary. Why? Because many other people are paying for them. If we simply understand that I pay social insurance when I work, when I retire, I receive the portion I paid, then when you work, you pay 30%, when you retire, you only receive 30%, not 75%. It is like an accumulation fund, if you put a certain amount of money into it to save, then you will only receive that much. The reason why you receive 75% when you retire is because there is a difference between the number of people who pay and the number of people who receive.

PV:That is the story about the Social Insurance Fund, however, in this story of raising the retirement age, there is an opinion that people who have reached the age of 60 should retire because their ability to work has decreased and their labor productivity is also lower. What do you think about this opinion?

Associate Professor, Dr. Nguyen Thi Lan Huong:When we want to calculate whether someone is useful or not, we have to consider it from many angles. From an economic perspective, from 0 to 15 years old, they cannot do anything, their parents have to support them when they go to school, so the production part is considered negative. When they retire at 55 or 60 years old, they no longer produce, it is also negative. This is the income line of a person's life. The spending line is from birth, they have to spend. A society must have a surplus of people of working age to exist. People produce a larger amount than they consume. That surplus will be distributed to the period before the age of 15 and after retirement. Workers are working normally but when they reach retirement age, it is currently calculated according to the average retirement age model of 58 years old, is it a loss or a gain for society? The Social Security Fund has to pay pensions, people also lose income to create surplus value. It is clear that society loses and gains nothing.

PV:I have heard that the retirement age is set at 60, for example. If the proposal to raise the retirement age is approved, it could be even higher, but what if people only want to work until 45 and then retire?

Associate Professor, Dr. Nguyen Thi Lan Huong:In countries, retirement age and retirement age are distinguished. Retirement is a person's right to work. The regulation is 60 years old, but at 55 years old, people have the right to apply for retirement. In countries where retirement is not encouraged, people are fined, but in Vietnam, those who are not old enough to retire are deducted. Therefore, we must distinguish between retirement age and retirement age. In addition, we must distinguish between the retirement age of a person's life and the retirement age of a profession. Many opinions say that the profession of rubber tapping, for example, must retire earlier... Then, do people retire at the age of 30 in dancing? Can athletes who are no longer able to compete at 20 years old retire at that time? Retirement of a profession is completely different from retirement of a person's life. A person's life must be calculated based on both the contribution fund and the benefit fund. As for professions, they must change careers and receive advanced training. For example, the profession of rubber tapping, if rubber tapping is no longer allowed at the age of 40, it must be trained to switch to another job.

PV:There have been opinions that raising the retirement age and extending the working age could take away jobs from young people. What do you think about this opinion?

Associate Professor, Dr. Nguyen Thi Lan Huong:I can confirm that in all the studies in the world, as well as ours, there is no evidence to prove that extending the retirement age for the value-added classes will cause the youth to lose jobs, and even the opposite. The problem is choosing who stays, who can stay and who cannot. For example, a female director who is not capable, it is best to retire, but when she retires, there will only be one vacant position, and of course, that position cannot be filled by young people. Because the labor market is a very clearly segmented market.

For example, a doctor in a public hospital reaches retirement age. If he retires, there will only be one vacancy, but that doctor continues to work for another private hospital. Because of that doctor, there will be 100 patients coming to see him, from 100 patients, he will need 10 security guards instead of 2 as before. He should only need 10 nurses, but with the increase in patients, he will need 20 more nurses. So does that doctor create jobs or take away jobs from others? Suppose that the doctor stays in the public sector, whether he sits there or not, the hospital is always overloaded so people do not see that doctor as important. Why can the private sector pay much more for that doctor to work there? That is the pervasiveness of that person.

PV:What is your personal view on this proposal to increase the retirement age?

Associate Professor, Dr. Nguyen Thi Lan Huong:My point of view is that it is objective. And it is a necessary requirement. Like children, at 3 months they must know how to roll over, at 7 months they must know how to crawl, at 9 months they must crawl. That is inevitable. With a wide-based population model like ours today. Previously 40% were under 23 years old, now only 23%. Therefore, the retirement policy must follow the population model. Besides, it also depends on surplus value. Retirement age is a socio-economic issue, it is not as simple as people think that a person staying is "greedy for power and position".

PV: However, on this point, it is said that it is very difficult to judge who needs to stay and who does not?

Associate Professor, Dr. Nguyen Thi Lan Huong:I have to admit that when the boss stays, the deputy cannot be promoted, but the problem is that if the boss stays and the deputy cannot be promoted, it will only affect the deputy. However, if the boss stays and creates a lot of social value, it will benefit many people. The issue that needs to be mentioned is to evaluate who stays and contributes a lot to society and creates surplus value. What we need is an organizational system and transparent criteria to evaluate this issue. This is not only the responsibility of agencies and units but also the responsibility of society. Regarding the matter of raising the retirement age, it is also necessary to calculate that if the retirement age is increased, there will need to be a gradual increase roadmap over many years, each year increasing only 2-3 months; each time the age of women will increase more than that of men to ensure that at a certain point, the retirement age of men and women is equal. The roadmap for the increase can be 5-10 years, even 15 years.

Thank you Associate Professor, Dr. Nguyen Thi Lan Huong!

According to CAND