The retirement age of Vietnamese workers is likely to be increased under a proposal from the Ministry of Labor, Invalids and Social Affairs (MoLISA) amending certain points of the Labor Code.

It has proposed two options. The first is to retain the existing retirement age at 60 for men and 55 for women while the second is to increase the age to 62 for men and 60 for women.

The proposed change is based on the rise in average longevity of Vietnamese people compared to previously, the long gap between average life expectancy and average retirement age meaning that many people of retirement age still wish to work, Vietnam’s rapidly aging population, and concerns over social welfare funds in the future.

If the retirement age is not increased then by 2020 the country’s social insurance funds will be equal to spending and by 2037 will be depleted and require government funding, according to Vietnam Social Insurance.

Average life expectancy in Vietnam is now 73 while the average social insurance contribution of a person is about 25 years, Vietnam Social Insurance’s figures show. This will not be enough to cover pensions for retirees in 20 years. Vietnam pays the highest amount of social insurance in Asia but the number of people receiving pensions is also high.

About 70 per cent of the country’s 90 million population are of working age, according to the World Bank, which added that Vietnam is aging at one of the world’s fastest rates and at a much lower income level than other countries exhibiting the same trend.

Of concern to the government is the pressure placed on social insurance schemes, which the International Labor Organization (ILO) has predicted will be exhausted by 2034 if policies are not overhauled.

Any rise in the retirement age would have to consider a range of factors, such as socioeconomic conditions, incomes, and pensions. People employed in hazardous conditions are currently able to retire earlier. MoLISA said that Vietnam’s older population is increasing very quickly, from 6.9 per cent of the population in 1979 to 10.5 per cent now.

By 2050 Vietnam is forecast to have 10 million elderly citizens and under existing policies the funding of pensions will be problematic by 2051.

VN Economic Times