Research on changing pension calculation method

Deputy Minister of Labor, War Invalids and Social Affairs Pham Minh Huan said that by 2029, the pension fund in Vietnam could be exhausted if the pension system is not reformed.

Workshop “Evaluation of pension fund finances in Vietnam - Forecast results
and recommendations”. - Photo: VGP/Thu Cuc

Deputy Minister Pham Minh Huan made this comment at the workshop "Assessing pension fund finances in Vietnam - Forecast results and recommendations" recently organized by the Ministry of Labor, War Invalids and Social Affairs in coordination with the International Labor Organization (ILO) in Vietnam.

At the workshop, delegates presented financial forecasts for the current pension program of Vietnam Social Security and said that gradually increasing the retirement age is a solution to balance the finances between revenue and expenditure for the fund, along with amending the pension calculation method to increase the sustainability of the pension fund in the long term.

ILO expert in Vietnam Carlos Galian said that the pension fund will start to run a deficit from 2020 and could be exhausted by 2029. This will be a big challenge for the Vietnamese economy.

According to a report by the Ministry of Labor, War Invalids and Social Affairs, only about 20% of the labor force participates in social insurance in Vietnam. This rate may increase in the near future as Vietnam is entering a golden population period with the number of people of working age (15 years old and above) accounting for 58.5% of the population structure.

However, the aging process in Vietnam is happening very quickly and a large proportion of the population will no longer receive social benefits in the future. Increasing the retirement age is considered an important measure to balance the finances between revenue and expenditure for the fund.

According to Deputy Minister Pham Minh Huan, promoting the assurance and completion of the social security system, in which social insurance and pensions are at the center, has always been a consistent policy and a consistent orientation of the Vietnamese State throughout the development process. The National Assembly's law and legislation development program for the 2011-2015 period will consider amending the Social Insurance Law to suit the reality.

Currently, there are more than 10.1 million people participating in the compulsory insurance regime, all Vietnamese citizens who sign labor contracts of 3 months or more are eligible to participate in social insurance. Civil servants in the state sector are eligible to participate in the compulsory social insurance regime and other Vietnamese citizens aged 15 to 55 (for women) and up to 60 (for men) who are not eligible to participate in compulsory social insurance can participate in voluntary social insurance.

According to (Chinhphu.vn) - LT