Reducing the minimum social insurance payment period to 15 years, is the pension low?

Editor's note:

The number of workers withdrawing social insurance one time this year is higher than the previous year, showing a worrying reality: many people will not have a pension when they reach old age. Withdrawing social insurance one time and then paying again also has consequences for workers, businesses and the State.

The obvious shortcomings are the low pension contribution regime, manual workers face the reality of "short working life, too long retirement age", when they reach the recruitment age they have to withdraw social insurance to spend.

VietNamNet newspaper reflects the above situation, contributing to a clearer identification and hoping for appropriate changes soon when the draft revised Law on Social Insurance with new proposals is being widely consulted.

Social insurance payment period is too long to receive pension

In the revised Social Insurance Law project submitted to the Government, the Ministry of Labor, Invalids and Social Affairs proposed reducing the number of years of social insurance contributions from 20 to 15 years to receive pension.

Workers in certain arduous, toxic, dangerous occupations, mines, and difficult areas can retire 5-10 years earlier than the general age.

In case of receiving social insurance payment once, the minimum social insurance participation time to receive pension must be 20 years instead of 15 years like others.

After reducing the number of years of social insurance contributions, the drafting agency proposed that the monthly pension be calculated at 45% of the monthly salary for social insurance contributions when women have paid for 15 years and men have paid for 20 years, then each year of contribution is added 2%, the maximum pension is 75% of the salary.

A low pension in old age is better than none. *Illustration photo: Vietnam Social Security*

If the above proposal is approved, women who reach retirement age after 15 years of social insurance contributions will receive a pension equal to 45% of the contribution rate. In the case of employees who only pay social insurance at the minimum wage, in the past 15 years of contributions, the average monthly salary for social insurance contributions is only 3.8 million VND/month, if they retire, they will receive a salary of 1.7 million VND/month.

For men, if they reach retirement age after only 15 years of social insurance participation, each year of contribution will be calculated at 2.25% (because they have not yet paid for 20 years to be calculated at 45% of their salary), and their pension will be calculated at 33.75% of their monthly salary for social insurance contribution. If the same monthly salary for social insurance contribution is 3.8 million VND/month as for women, and they have paid for the same 15 years, men will receive a salary of less than 1.3 million VND/month when they retire.

According to the International Labor Organization (ILO), under current Vietnamese regulations, the minimum period of 20 years to be eligible for a pension is too long. Many workers do not expect to contribute for 20 years, especially with the high proportion of informal workers and workers with unstable jobs today. Meanwhile, according to international labor standards, the required contribution period to receive a pension should not exceed 15 years.

Therefore, it is necessary to increase the possibility of workers being eligible for pensions by reducing the minimum period of social insurance participation so as to give workers more incentives to continue their contribution period.

Paying social insurance for 15 years does not mean low pension

Regarding this issue, in an interview with VietNamNet reporter, Ms. Nguyen Thi Lan Huong - former Director of the Institute of Labor and Social Sciences (Ministry of Labor, Invalids and Social Affairs) said that the regulation of reducing the time of social insurance payment to receive pension does not mean that retirement salary is low. This is the minimum condition for those who enter the labor market late (age 35-40) to have the opportunity to enjoy pension policy.

For those who participate in social insurance for a longer period, the benefit level will be higher when they reach retirement age, still no change compared to now.

Ms. Huong also pointed out the fact that in the past, many people who did not pay social insurance for 20 years almost "lost everything", only receiving a "lump sum" regime (no pension), and now when they are old, most of their lives are very difficult.

Therefore, the policy of reducing the contribution rate to 15 years to receive pension is to help workers have the conditions to enjoy pension when they retire.

According to the Ministry of Labor, Invalids and Social Affairs, when reaching retirement age, workers who pay social insurance for a short time will have low pensions, but it is still better for workers when they retire, reducing the burden on the State budget in social subsidies for the elderly.

The purpose of this change is to facilitate short-term social insurance participants to enjoy social insurance benefits.

Mr. Bui Sy Loi, former Vice Chairman of the National Assembly 's Social Committee, assessed that reducing the social insurance payment period to 15 years is to encourage and create opportunities for middle-aged people, men 45 and women 40, to still be able to participate in social insurance.

Agreeing with the reduction of the social insurance payment period to 15 years, former Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan raised the issue that, according to the proposal, the pension levels for men and women are different. To receive a pension equal to 45% of the contribution level, women only need to pay social insurance for 15 years and men need to pay 20 years even though the payment basis is the same.

Therefore, Mr. Huan proposed that the drafting agency should carefully study to ensure harmony between contribution and benefit levels for employees, in the direction that both men and women who contribute for 15 years will receive 45% of their salary.

Source