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.
Withdraw 'a lump sum' to get capital to do business
Ms. Le Thi Hang (40 years old), a worker at a paper manufacturing company in Dong An Industrial Park (Binh Duong), said that after the Covid-19 pandemic, the company had less work and income decreased, so she was planning to quit and wait to withdraw her social insurance payment at once.
With 15 years of social insurance participation, if Ms. Hang withdraws all at once, she will receive about 200 million VND. This amount of money will help her family solve some problems and stabilize their lives.
Ms. Hang pointed out that in reality, many workers today think that at the age of 35-40, even if they have paid social insurance for 20 years, they still have to wait another 15-20 years to be old enough to receive a pension. Therefore, instead of waiting until retirement age, many people choose to withdraw their social insurance at once to have capital to do business after retiring.
“The regulation on the extended retirement age (62 years old for men and 60 years old for women) makes many workers consider immediate benefits instead of long-term benefits. Many people calculate that if they wait until they receive their pension, they will only live for about 10 more years, so they choose to withdraw their social insurance at once instead of waiting until retirement age,” said Ms. Hang.
Negative consequences for workers, businesses and the State
Mr. Pham Chi Tam, Vice President of the Ho Chi Minh City Labor Federation, stated that the current regulation stipulates that 20 years of social insurance contributions are eligible for pension, but there are people who have paid for 18-19 years and quit their jobs to withdraw their contributions at once when they are 40-45 years old.
Therefore, if the regulation reduces the social insurance payment period to 15 years to receive pension, the retirement age remains at 62 years old for men and 60 years old for women, then workers aged 35-40 who have participated in social insurance for 14 years cannot rule out the possibility of choosing the one-time withdrawal option to avoid having to wait too long until retirement age.
Mr. Tam said that although the draft amendment stipulates that people who withdraw their social insurance contributions at one time must pay social insurance for 20 years (instead of 15 years for those who have not withdrawn at one time) to receive a pension, many young people, when they lose their jobs, still choose to withdraw at one time and then when they have a job opportunity, they will continue to pay to receive a pension.
If an employee quits his job, withdraws all at once, then applies for a new job, pays social insurance for the second round for 15 years (or 20 years as in the draft revised Social Insurance Law) to receive a pension, it will leave negative consequences for the employee, the enterprise and the State.
“Employees who withdraw at once after 15-20 years of social insurance contributions will receive 45% of the benefit, which is not enough to live on. Meanwhile, businesses do not have stable production and business when many employees who have worked for 14 years and paid social insurance quit. Furthermore, if the number of people withdrawing at once continues to increase, there will be concerns about the social insurance fund going bankrupt,” said Mr. Tam.
Former Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan said that letting workers withdraw their social insurance in one lump sum and then re-enter the labor market from the beginning is a failure of the policy. When workers “withdraw all their money”, it makes their retirement insurance meaningless and leaves consequences for workers when they retire without a pension.
According to Mr. Huan, the policy of withdrawing insurance in one lump sum under the previous Regime 176 left a painful lesson for those who withdrew their social insurance in one lump sum. When they got old, they had no pension, so their lives were very miserable.
Mr. Huan said that reducing the retirement age is a more important condition than reducing the social insurance payment period from 20 years to 15 years to receive pension. To retain workers in the social insurance system, the social insurance payment policy must be appropriate.
Retirement age should be reduced for direct workers.
Proposing to the draft amendments to the Law on Social Insurance, 8 business associations (including the Vietnam Association of Seafood Processors and Exporters, the Vietnam Leather, Footwear and Handbag Association, the Ho Chi Minh City Food and Foodstuff Association, the Transparent Food Association, the Vietnam Textile and Apparel Association, the Vietnam Timber and Forest Products Association, the Vietnam Tea Association, and the Association of Motorcycle Manufacturers) said that the drafting agency should amend the law to create conditions for employees to retire early.
According to the business association, the draft should add a provision that employees can retire early according to their wishes, for women from 55 years old, men from 60 years old, when they have participated in social insurance for at least 15 years; the pension level will be based on the social insurance contribution rate, but for each year of retirement before the prescribed age, 2% of the pension rate will be deducted.
“The majority of Vietnamese workers do manual labor. When female workers reach 55 years old and male workers reach 60 years old, their health declines and they find it difficult to meet job requirements, and there is a high risk of losing their jobs. Therefore, if they have to wait until the current retirement age (60 years old for women and 62 years old for men), workers will have difficulty ensuring their livelihood,” said the business association.
Speaking with VietNamNet reporter, Mr. Le Dinh Quang, Deputy Head of the Policy and Law Department (Vietnam General Confederation of Labor) said that according to the newly revised Labor Code and the spirit of Resolution 28-NQ/TW in 2018, there is a roadmap to increase the retirement age for men to 62 years old and for women to 60 years old. Therefore, if it is proposed to reduce the retirement age, it will be very difficult.
However, the drafting agency can propose to add more subjects to retire earlier than the current regulations. In addition to heavy and hazardous labor, it can be proposed to apply to occupations such as: preschool teachers, primary school teachers, direct heavy laborers... These subjects can retire earlier and retain the maximum benefit of 75% of the salary for social insurance contributions.
Mr. Pham Minh Huan said that the Ministry of Labor, Invalids and Social Affairs is building a list of arduous and hazardous labor occupations, so the Drafting Committee can add occupations that allow early retirement without having to deduct 2% each year.
Next: For a 'comfortable' retirement age, social insurance contribution must be close to actual salary
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