The draft proposal to develop the amended Law on Social Insurance is going to be sent to the Government by the MoLISA by June 16.

As the current social insurance policy has many shortcomings and is not consistent with the rate of population ageing, the MoLISA proposed a number of amendments, including the retirement policies.

The ministry’s drafting board proposes to amend the conditions for pension entitlement, in the direction of gradually reducing the number of years of social insurance payment from 20 years to 15, and eventually 10 years. The benefit rate will be calculated appropriately, creating conditions for elderly employees with a low number of years participating in social insurance to enjoy benefits.

The Law on Social Insurance 2014 stipulates that employees who are of full retirement age in normal working conditions and have paid 20 years or more of social insurance premiums are entitled to a pension. The monthly benefit level is equal to 45 per cent of the average monthly salary paid for social insurance and corresponds to the number of years of payment as prescribed.

The elderly take part in yoga during a festival for the elderly held in District 2, HCM City. (Photo:Internet)

Leaders of the MoLISA said this regulation was "too tight" – 20 years was too long – so many employees could not accumulate the number of years of social insurance payment to enjoy pension benefits.

Along with the economic impact, many discouraged people have left the social insurance system. In the long term, the elderly without pensions will create great pressure on society when they have to allocate resources to ensure security and healthcare. If the above rule is kept, the social insurance coverage will not change significantly.

On the contrary, 10 years of social insurance payment is a very important period in Việt Nam. By 2030, the whole country has about 60 per cent of working-age people participating in social insurance.

According to calculations by MoLISA, if this plan changes, it will encourage people to participate in the system, increasing income sources into the short and medium-term social insurance fund, thus short, medium and long term spending will also increase. Employees will be better protected against the risks in the working process, towards old age with pensions.

The amended Law on Social Insurance is expected to be submitted to the National Assembly (NA) for consideration and comment for the first time at the December 2022 session of the 15th NA, passed at the May 2023 session and takes effect from the beginning of 2024.

By the end of last year, Việt Nam had about 14.1 million people over retirement age. More than 3.1 million of them are enjoying a monthly pension and social insurance whereas 1.8 million people enjoy retirement benefits. More than 9.2 million people over retirement age have not enjoyed another layer of security.