Vice labour minister Pham Minh Huan said the overarching plan is to keep the social insurance pay-outs manageable and to mitigate the negative economic consequences of a rapidly aging demographic.
The government can do this most effectively by leveraging higher average retirement ages against an ever-expanding younger middle income workforce, which will put the retirement fund’s finances on a sustainable footing.
Mr Huan said the Ministry wants to up the retirement age to 62 for men and 58 for women from the current mandatory age of 60 and 55 for men and women, respectively.
There is still much ongoing discussion regarding varying the retirement ages for differing occupations or industry segments, which the Ministry hopes to have worked out by the time the proposal is submitted to the National Assembly next month.
There is also ongoing consideration of equalising the retirement ages of men and women, he noted, and discussion to bring retirement ages back in line with the rising life expectancy in the country.
He said the Ministry anticipates a lot of pushback from some legislators concerned that the proposal, if enacted into law, would create more problems for younger workers in finding gainful employment.
Currently, roughly 70% of the country’s 93 million population is of working age, according to a World Bank report, he said, noting that the aging demographic of the population is threatening the liquidity of the retirement fund.
Of primary concern to the government is the pressure this places on the social insurance scheme, which many analysts including the International Labour Organization have predicted will be exhausted by 2034 if current policies aren’t reformed.
Meanwhile, the Vietnam Social Insurance Department reports the average retirement age in the country is about three years lower than the age stipulated by law (or 57 for men and 52 for women).
This results because current law allows for retirement and full pension for men and women retirees who have paid into the social insurance fund for 30 and 25 years, respectively.
Hypothetically, under current law a public worker who started working at age 25, could retire five years earlier than the mandatory ages and still be entitled to receive a monthly pension equal to 75% of their average monthly salary earned over their lifetime.
This policy incentivizes workers to retire early says the Department a move that much too often discourages workers from continuing working and contributing to the social insurance fund until the legal retirement age.
The Department also cited increased life expectancy as a basis for increasing the retirement age, saying it is a move consistent with other countries around the globe such as the US, Japan and Germany to name only a few.
Per an official survey conducted between 2007 and 2012, around 100,000 citizens (both men and women) retire each year, the average age of which is 53 years (55 for men and 51 for women).
Critics of the proposal to raise the retirement age say the root of the problem does not lie in the retirement age but lie solely in the current social insurance policy loopholes allowing for early retirement.