Vietnam's pension books getting stretched to the limit

By VnExpress   October 13, 2016 | 07:41 pm PT
Vietnam's pension books getting stretched to the limit
A worker returns home after work at Pha Rung shipyard in Vietnam's port city of Hai Phong, east of Hanoi October 4, 2016. Photo by Reuters/ Kham
Raising the retirement age is looking like the only way to deal with an aging population.

The mandatory retirement age in Vietnam's public sector, defined as the minimum age for social security pensions, is currently 60 for men and 55 for women, but policymakers are seeking to raise the official age of retirement to relieve pressure on the social welfare system and health care services.

With Vietnam's population aging rapidly, the country will soon have to pay some pensioners for more years in retirement than they spent making compulsory contributions to the state pension budget as workers.

The demographic pressure on the welfare system is becoming more apparent and less like tomorrow’s problem.

Spending on state pensions has already increased and is going to pick up speed in the years to come as the working-age population shrinks.

It is forecast that by 2037, further delays to lifting the retirement age will force the government to subsidize the pension system.

The Labor Ministry has worked out a detailed proposal to lift the retirement age, which is scheduled to be put in front of lawmakers for thorough discussion in May 2017, said Bui Sy Loi, vice chairman of the parliament’s committee on social issues.

Experts who are in favor of increasing the retirement age argue that this is one the best ways to tackle growing pressure on the state budget, saying that the demographics of the future are heading one way with a steady decline in the number of people working and paying for an increasingly growing number of retirees.

They also said keeping people on the job for longer could potentially increase the labor supply and increase economic productivity.

However, lifting the retirement age has its problems. In 2014 the Labor Ministry tried and failed to call for the state retirement age to be lifted to 62 for men and 57 for women.

Dang Thu Hien, 51, has worked for 27 years as a high school literature teacher. She is going to retire in four years time.

Hien is among those against the policy change that will make women stay in their jobs for 3-5 years longer.

She said even though Vietnamese elders are living longer, most of them are spending those extended years in poor health.

Many women aged 50 or above are not healthy enough to carry on working.

Hien also raised the question of how to take advantage of older workers without harming the job opportunities for young people.

Nguyen Huu Dung retired at the age of 64, four years later than the retirement baseline, from a top position at the Institute of Labor, Science and Social Affairs. Since then he has been working as an adviser to the Labor Minister and is a highly regarded freelance consultant.

He said older workers are often highly skilled and experienced, so with or without the proposed change, these people will continue working and paying tax.

Dung is more concerned about youth unemployment.

“Too many jobless young people could send society into chaos,” he said.

“We should let senior workers make the decision for themselves whether to work longer or retire,” said Dung, suggesting the government should deploy a flexible policy when it comes to the retirement age.

The retirement age has not been set in stone and proposed changes are waiting approval, said senior lawmaker Bui Sy Loi, adding that the government will alert the public of any changes to the retirement age.

According to the United Nations Development Program, if Vietnam fails to create jobs, develop social security and improve quality of life before the working age population peaks, it will risk instability including a lack of workers and an increased need for health care for the elderly.

Related news:

Retirement could be a long way off for aging Vietnamese workers

Vietnam's aging workforce on the road to retirement

Vietnamese people pay unhealthy price for longer life

go to top