Flash-forward: paltry pensions, tensions and options

I am forced to consider this because my current pension scheme would be vastly insufficient to ensure my old age independence.

More than a decade ago, I visited a private hospital that also provided healthcare and accommodation services for the elderly in Vung Tau Town, and started making preparations for my retirement.

The hospital's target customers were wealthy old people who could go there to visit the doctors and stay for as long as they wanted, with nurses deputed to look after them.

The room rate was VND1 million ($43.47) per day, not including other service fees. The hospital's developer hoped that wealthy patrons would be lured by the modern equipment, friendly services and the lovely weather conditions of breezy sunshine in a beach town, not to mention the opportunity to interact with people of the same age group from similar economic backgrounds.

However, the hospital closed after a few years because it did not attract enough customers. I was not surprised. When I attended its grand opening in 2007, I was already skeptical of its feasibility.

Then and now, most elderly Vietnamese would consider paying several dozen million dong per month the spending behavior of the very wealthy class, especially based on current pension schemes.

Vietnam currently has about 2.4 million people receiving state pensions, according to the Ministry of Labor, Invalids and Social Affairs. The majority receive VND3-4 million per month, but many get less than VND1.3 million and the lowest pension in the country is just VND350,000 a month.

In HCMC, where over 138,000 people are receiving state pensions, the average is about VND2.5 million per month, significantly lower than the average monthly expenditure for a resident in the city. A decade ago, in 2012, a municipal survey found that a HCMC resident needed VND3.5 million for essential expenses each month. No surprise then, that it is difficult for many people to live solely on current pensions.

I calculated that if I was to work the minimum number of years to be eligible for state pension, I would need to work another 15 years. Over the past several years, I've been able to pay insurance based on a coefficient salary. If things continue like this, I would have a pension of about VND5 million per month when I retire.

Currently, the service fees for a room with 6-8 persons at a typical nursing home ranges from VND8-10 million per person per month. This does not include support services like personal hygiene, special care, medicines and pain-relieving massages.

Earlier this week, the Ministry of Labor, Invalids and Social Affairs proposed increasing the pension by 15 percentage points for eight beneficiary groups, but people like me are not among those.

Therefore, in order to avoid having to rely on support from my children, I must definitely have savings of at least a few hundred million dong, a couple of rooms or houses for rent or work part-time after retiring to be able to afford living on my own.

Nguyen Thi Me, 77, collects scraps in Hanoi to make a livng, February 2018. Photo by VnExpress/Ngoc Thanh.

Emotional reactions

I tried talking to my daughter about this. Among other things, I said that when she gives birth, I would only look after mother and child for a month because I wanted my independence as a senior citizen. She burst into tears, saying "doing that is so weird and unlike other mothers."

Despite her emotional response, I am determined that I will not live with my children, whether they stay in the same city or move far away.

Instead, I might invite my friends to form an association, buy a plot of land and build a house for us to live together.

If we're still healthy, we'll hang out together and go traveling every now and then. Once we become slow and our visions blur, we'll move into nursing homes for nurses to look after us. In 20 years, there would certainly be more nursing home options.

The ability of Vietnamese seniors to live independent of their children’s incomes is not an issue to be brushed under the carpet for any reason. The fact is that Vietnam's population is aging very quickly. According to the General Office for Population, by 2054, up to 19.9 percent of the population will be aged 65 and over. And this will have its particular impacts on our society.

I was once startled by the sound of people arguing downstairs. An elderly woman was scolding her daughter-in-law about some household affairs, although she was still dependent on her children. We can well imagine the turns such conversations can take and what their impacts will be on the elderly and their families.

In the apartment building's yard, I often chat with "grandpa missing river," a nickname I have given to a 92-year-old man from the Mekong Delta. He said that due to circumstances, he had to move to Saigon to live with his children. Every few days, he would walk a few kilometers to the Binh Khanh Ferry Station to see the river and assuage his homesickness, since his children have forbidden him to ride a bicycle. Looking at him, I thought to myself that I must try not to be "forced" to follow my children to another place and be tormented by homesickness.

But, in order to become an independent elderly, the first question that needs to be asked is where to get the needed money. I know that my pension won't be enough to live the way I want. It would only be enough for me to get a minimum standard of living, as it is for the majority of people living on pensions across the country.

The challenges

To design a different future, I have a few challenges to overcome. Firstly, I should quit work at state agencies and work for a company with a very high salary so that my social insurance contribution in the coming 10 years plus would be based on a higher income level. That way, my pension would no longer be just VND5 million. Secondly, I need to somehow have savings of several hundred million dongs or at least own one rental property.

Thirdly, the government's pension and social security policies for the elderly should undergo major changes. I'm not sure this will happen. As the labor ministry has explained, the proposal to increase the pension by 15 percentage points for a number of beneficiary groups is to offset slippages that have occurred since the government has not made adjustments in the past two years for the prices of many goods having increased by more than 15 percent.

After the nursing home in Vung Tau went bankrupt, its owner told me that the "Vietnamese elderly are still not ready to live in a place that's not their home, and retirement finances are unstable."

Meanwhile, the International Labor Organization (ILO) has warned that "there will be about 16 million Vietnamese with no pension by 2030 unless the government takes appropriate policy decisions."

Establishing a minimum pension is an idea that has been recommended to the government for several years, but it remains under consideration because the capacity of the national insurance fund is very limited.

The ILO has also recommended that Vietnam introduces a multi-tier pension system which would give more, easier options for the public and increase the number of people that can receive at least the minimum income after retiring.

Private pension fund models have also been recommended, but adequate legal framework for them to operate does not exist now. As in many developed countries, I believe that a system of private pension funds, if designed well, would be an effective support for the state's social insurance fund.

A pension sufficient to ensure that they would not need to depend on relatives and others in their old age is a legitimate desire for everyone. I can pour all my savings into funds, whether private or public, if I believe that I would receive enough income to become a happy, independent elderly citizen.

I hope that all the stakeholders will act together for ensuring the convergences needed to make independent old age living a strong possibility.

*Minh Tam is a journalist. The opinions expressed are her own.