VietNamNet Bridge – Deputy Minister of Labour, Invalids and Social Affairs Pham Minh Huan talks to Dau Tu (Investment) Newspaper about possible changes to the pension in 2015.

Illustrative image. – File photo

Can you talk in detail about the change in pension policies in the amended Law on Social Insurance, which will be submitted to the National Assembly shortly?

Currently, the pension for non-state labourers is calculated based upon the length of time that labourers pay for social insurance. The draft committee for the amended Law on Social Insurance proposes that pensions for state employees who start paying for social insurance from January 1, 2015, be calculated based upon the same method – on the total length of time that they pay for social insurance. Previously, pensions for state employees were calculated based upon the average amount of the last 10 working years before they retire.

The new regulation will ensure equality between different payers of social insurance, while also ensuring the principle of getting what you pay for. It will get rid of the situation in which one gets more than what they actually paid, and caused the current gap in social insurance funds in receiving and spending.

Will the new regulation not favour state employees who begin paying social insurance from January 1, 2015, because according to the old method, their pensions might be higher?

If the new regulation is applied with state employees who start paying social insurance from January 1, 2015, these employees will begin receiving pensions in 2035, at the earliest. By that time, the basic wage will have increased considerably, compared to current wages.

Certainly, state employees who start paying for social insurance in 2015 will have lower pensions than using the old calculation method. But tackling shortcomings of the old social insurance policies is a complicated matter. Thus, the drafting committee could only propose new regulations with new subjects, so that all previous payers of social insurance before 2015 won't be affected.

The National Trade Unions' opinion is that we should only change the method of calculating pensions when the amount of social insurance payment is based upon the actual salary that one receives (basic salary and bonus, etc.), but not the salary stated in the labour contract. What's your opinion about this?

To balance the spending and collecting of social insurance funds, we are carrying out various solutions, and not only with pensions. The solution suggested by the National Trade Unions is being considered by the Ministry of Labour, Invalids and Social Affairs. However, we cannot go with this change quickly.

Charging the social insurance payment based upon non-salary incomes will cause enterprises to spend a lot more, especially when the basic salary is increased evenly. This would reduce the attractiveness of the country's economy and the competitiveness of enterprises.

We're considering applying this method of calculation beginning in 2018 or 2020, after submitting it for the National Assembly's approval.

The draft amended Law on Social Insurance will be discussed by the NA this May and voted on for approval in October this year.

Source: VNS