VietNamNet Bridge – According to the draft bill on social security being submitted to the National Assembly in May, pensions will be reduced while the retirement age will be raised.

This change is not supported bythe public, as it is widely felt that raising the retirement age would adversely impact the health of workers. It is suggested that the authorities force employers to pay sufficient social insurance premiums for their workers.

According to the draft, from 2015, pensions of public sector employees will be calculated based on the average amount of social insurance paid by workers during their entire working lives, instead of the average of the last ten years of the working lifetime, as is the current method. Accordingly, many people will receive lower pensions.

The application time is scheduled for January 1, 2015, so there will have the first retired workers who will be paid pensions under the new way of calculation in 2035, because as required, only workers who pay social insurance for at least 20 years are allowed to enjoy pensions. Those who begin to pay social insurance before that date will not follow the new regulations .

In the draft bill, the retirement age will increase. Specifically, from 2016, the retirement age for public servants and state employees will increase by 1 year every 3 years until it reaches the age of 62 for both males and females or 62 for males and 60 for females.

From 2020, the retirement age for other groups will also increase along the same roadmap. Thus, men will have to work for an additional 2 years and it will be 5-7 years for women, as compared with the current regulations. Ultimately, workers will have to work longer and enjoy lower pensions.

According to Mr. Pham Minh Huan, Deputy Minister of Labour, Invalids and Social Affairs, the above changes aim to ensure equality and to balance the pension fund in the long term. He says that under the current policy, workers pay low social insurance but they enjoy high pensions and this has led to imbalance in the pension fund.

Huan adds that the number of pensioners is increasing. Specifically, in 1996 there were 217 people paying social insurance for every 1 pensioner.  The ratio was 14/1 in 2007 and only 9.3/1 in 2012.

He says that as the retirement age is low, so the time to pay social insurance is also short, while the time to enjoy pensions is long. The average number of years of paying social insurance is 28 for men and 23 for women.

Citing from the population census of 2009, the Ministry of Labor, War Invalids and Social Affairs says that the average number of living years of males after the age of 60 is 18, and of females after the age of 55 is 24.5. Thus, the state has to reconsider the pension age and the method of pension calculation to prevent the collapse of the pension fund.

That is the statement from the state agencies. In fact, retired people are paid very low pensions because their employers did not pay social insurance premiums based on their actual wages but only on the minimum wage. Retired people cannot live on their pensions.

A retired official of the Vietnam Social Security Agency says the problem is that the number of social insurance payers is very low – only about 20% of the total work force. On the other hand,  as many as 78% of workers are considered compulsory subjects  for paying social security. He also says that many employers try every way possible to avoid paying social security to their workers.

VietNamNet/TBKTSG