Further, the responsibilities to meet the problems posed by the aging population must be shared between the government, private companies and individuals, said Nguyen The Phuong, deputy minister of the MoIT.
Deputy Minister Phuong made the comments in reference to a new World Bank report on aging in the East Asia and Pacific region, which reinforces earlier reports warning of the negative ramifications of an aging population.
The report said efforts to compensate for an older population must take into account that people in Vietnam are both living and working longer and that the population is on a trajectory to get older quickly.
Many countries, most notably Japan, are already grappling with a population pyramid with a narrow base of fewer young workers widening out to a much larger population of middle aged and older citizens.
According to the report, some reforms should be carried out immediately, such as removing incentives in public and private pension systems that encourage early retirement.
This aging phenomenon is real, the report underscores, and has serious implications for the economy as the working age population of Vietnam shrivels over the next two decades, said the report.
“But even as the need to create programs to care for the elderly becomes more pressing,” Deputy Minister Phuong said, governments must extend benefits for older workers in a "fiscally responsible" manner.
He noted that companies could explore the option of setting aside a part of every employee's payroll from their first day of employment in a separate private retirement fund, by default, as a type of forced savings for the future.
Employees would have to make "a conscious decision to opt out," said the Deputy Minister. Plans, such as these, could help instill a sense of consciousness in people about planning for the future, and may lead to a higher percentage of salaries contributed to retirement savings.
Another option, he said, is to increase current tax rates for the pubic social security fund to compensate for the anticipated greater need for social security insurance funds forecast to occur by the World Bank in 15 to 20 years.
Professor Nguyen Dinh Cu, former Director of the Institute of Population and Social Studies in turn suggested a plan to progressively raise the retirement age to provide the nation with more workers.
“At the same time,” Professor Cu said, it would reduce the demand on the nation’s social security fund, other private retirement funds and personal investment accounts, all of which would have a positive impact on the economy.
Caring for an aging population is particularly pressing in Vietnam, with the World Bank report noting that the speed of aging and the size of the older population is faster here than any other place in the East Asia and Pacific region.