The retirement age in Vietnam, currently 60 for men and 55 for women, may be gradually raised to 62 and 60, respectively, beginning in January 2021, the Ministry of Labour, Invalids and Social Affairs (MOLISA) has proposed.
MOLISA offered the suggestion in a draft revision of the Labour Code, but also included the option of leaving the retirement age unchanged, reported Vietnam News.
If the change is implemented, the retirement age will increase by six months annually until it is 62 years for men and 60 years for women.
The main reason for raising the retirement age, according to MOLISA, is to ensure the sustainability of the social pension fund in the long run.
Calculations by the International Labour Organisation forecast that the social security fund will face revenue shortfalls beginning in 2023, and be depleted by 2034, forcing the government to subsidise the system.
To ensure the fund’s sustainable operations without raising the retirement age, either employees and employers will have to pay larger social insurance contributions or employees will have to receive smaller retirement pensions, MOLISA said.
However, lifting the social insurance contributions of employees and employers will increase their financial burden and decrease their competitiveness. And lower retirement benefits will have a negative effect on pensioners’ lives. Therefore, raising the retirement age is considered to be the best option.
The draft revision of the Labour Code will continue to be discussed and is to be submitted to the National Assembly at the May 2019 session.
The Vietnamese government has been considering gradually raising the retirement age to 62 years for men and 60 for women since 2014. At that time, the proposal was to implement the hike with effect from 2016. However, it met resistance from lawmakers.