Don't think that increasing the retirement age is a form of power abuse.

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 (KHLĐXH) 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 years old and women retiring at 55 years old 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 applied from the time 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 Security Fund is a mixed revenue and expenditure fund, meaning that the contributions of young people support retired people. Previously, since the 1960s, 25 people contributed 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 aging population process 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 contributed for 1 beneficiary, now it has decreased to 9 people contributed for 1 beneficiary, by 2040 it will be 2 people contributed for 1 beneficiary. With such a population aging 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 the retirees themselves have also paid. When they retire, will they 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 combination of revenue and expenditure. 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 in a certain amount of savings, then you only receive that amount. The reason why retirement receives 75% is because there is a difference between the number of people paying and the number of people receiving.

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 productivity is also lower. What do you think about this opinion?

Associate Professor, Dr. Nguyen Thi Lan Huong:When we want to calculate whether a person 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 reach 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 15 years old 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, for example, 60. If the proposal to raise the retirement age is approved, it could be even higher, but what if people only want to work until they are 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 people have the right to retire at 55 years old. In countries where retirement is not encouraged, people are fined, but in Vietnam, those who are not yet 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, should retire earlier... Then, in the profession of dancing, people only retire at 30 years old? In the profession of athletes who can no longer compete, should they 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, we must change careers and receive advanced training. For example, in the profession of rubber tapping, if people are not allowed to tap rubber at 40 years old, they must be trained to switch to other jobs.

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, or even the opposite. The problem is choosing who stays, who can stay and who cannot. For example, a female director who is not capable should 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 doctor stays in the public sector, will he sit 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 influence 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 a child, at 3 months they must know how to roll over, at 7 months they must know how to crawl, at 9 months they must run. 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 chief stays, the deputy cannot be promoted, but the problem is that if the chief stays and the deputy cannot be promoted, it only affects the deputy. However, if the chief 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 increase in 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 increase is made, women will increase more than men to ensure that at a certain point, the retirement age of men and women is equal. The increase roadmap can be 5-10 years, even 15 years.

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

According to CAND