Increase retirement age to effectively use the labor force?

The Deputy Minister of Labor, War Invalids and Social Affairs answered a number of questions related to the draft study on increasing the retirement age.

The adjustment to increase the retirement age is being studied by management agencies to be included in the Draft Amendment to the Labor Code, expected to be submitted to the National Assembly in 2017. So, why must the retirement age be increased and how will it affect the health and psychology of workers? VOV interviewed Mr. Pham Minh Huan - Deputy Minister of Labor, War Invalids and Social Affairs about this content.

Mr. Pham Minh Huan - Deputy Minister of Labor, War Invalids and Social Affairs.

PV:Sir, the proposal to increase the retirement age is not a new issue, so what is the reason for the management agencies to once again conduct research and seek opinions at this time?

Deputy Minister Pham Minh Huan:Researchers warn that the rate of population aging in our country is increasing very rapidly, meaning that the life expectancy of Vietnamese people today has increased significantly. In fact, our labor force, women over 55 years old, men over 60 years old, has many people with qualifications, capacity, experience and they can contribute well in specific job positions. Especially the pension fund, the contribution period is too short, the benefit period is too long, leading to an imbalance in this fund.

In terms of policy, there are two aspects: either we have to increase the contribution rate or reduce the benefit rate. Therefore, studying the increase in contribution rate by extending the contribution period is also a factor. In addition, the trend of countries in the world, due to increasing life expectancy, is to extend the working time. They also have to change the retirement age to effectively use the labor force, especially the highly skilled labor force. With these four factors, we need to raise this issue for research.

PV:Some say that increasing the retirement age will take away opportunities for young workers. What is your opinion on this issue?

Deputy Minister Pham Minh Huan:There are two sides to every issue. On the plus side, we can make better use of experienced workers. But on the other hand, we have to take into account the health factor, as we get older, the issue of productivity, and especially the impact on the labor market, as more people reach working age.

These are challenges that must be taken into account when developing a plan to choose the most appropriate method. In all countries, increasing the retirement age must follow a roadmap. For example, in our country, today the retirement age for women is 55 years old, for men is 60 years old, but tomorrow it is set to 2017, for women is 60 years old, for men is 62 years old, for example, that is not the case. There must be a roadmap, gradually increasing by a few months each year to avoid being affected. The relevant agencies will have to calculate this problem.

PV:Sir, will increasing the retirement age reduce the pension level?

Deputy Minister Pham Minh Huan:In fact, the Social Insurance Law 2014 has made an adjustment. We believe that we are in the process of reforming social insurance policy. Currently, our contribution rate is 32.5% of salary and income. As for the benefit rate, in the old law, the maximum insurance benefit rate is 75% of the average salary for social insurance contribution. This is a high rate in the world. In other countries around the world, the average pension rate is only 40-60%, but because our salary base is low, even though the contribution rate is 75%, the absolute salary received is also very low. Therefore, there is an adjustment in the benefit rate. For example, in the past, participating in social insurance, men were 30 years and women were 25 years, then they received a maximum pension of 75%, but now, to get this maximum rate, men must have 35 years and women must have 30 years.

PV:So how does the proposal to increase the retirement age take into account the health and psychology of workers, sir?

Deputy Minister Pham Minh Huan:Of course, we have to prepare mentally and the workers themselves need to prepare. Health is also obviously a factor. The physical condition of Vietnamese people compared to the region is not very good. That is why in many countries, people can increase the retirement age to 65 years old.

We have not yet calculated the specific plan, but many experts have also suggested that, in the short term, instead of men retiring at 60, it could be 62, and women could be increasing from 55 to 58. Later, when Vietnam's socio-economic conditions improve and the physical condition of Vietnamese people improves, we may be able to continue to adjust it upwards.

PV:Thank you!