VietNamNet Bridge – The Vietnam Social Insurance Fund is suffering from big losses of revenues due to the early retirement of laborers, said a senior executive of the fund.

On average, laborers have retired 3.5 years earlier than regulated, causing a loss of VND192 million for the country’s social insurance revenue, and therefore, stricter regulations on early retirement is necessary, said Do Van Sinh, deputy general director of the fund. Prevailing laws regulate the retirement ages at 60 for men and 55 for women.

Sinh told the Daily on the sidelines of a seminar on social insurance in Hanoi on Monday that with an average monthly salary of VND3.4 million a laborer, the fund should be able to collect VND14 million of insurance premiums a year from both the laborer and the employer.

Due to early retirement, this sum is lost, while the fund will have to disburse VND40 million to pay retirement pension and transfer VND1.8 million from the social insurance fund to the health insurance fund for the laborer.

Therefore, for every year of early retirement, a laborer will cause the social insurance fund to lose VND55 million, or VND192 million in 3.5 years.

“At the moment, we have around 1.1 million retired persons who are benefiting from pensions, meaning a huge revenue loss for the country’s social insurance fund,” he said.

Pham Dinh Thanh, head of the Social Insurance Science Institute, said the social insurance fund is threatened with a huge deficit. It is expected that by 2023, income of the fund will be equal to its expenses, and after that, the fund will enter a period of deficits.

From 2024, the fund will have to use the capital sources retained from previous years apart from the revenue of that year to cover expenses, said Thanh.

By 2037, the fund is forseen to become dissolvent unless policies and solutions to increase its income and reduce its expenses are mapped out.

More and more people have retired before regulated ages despite the lower retirement pensions applied for them.

“If it is impossible to raise the retirement age in the near future, it is necessary to have stricter regulations to prevent early retirement,” said Sinh.

SGT/VNN