Greater awareness of social insurance and self-funded retirement needed in Vietnam.
On the afternoon of September 8 a conference on future retirement trends was held to discuss the issues arising from an aging population in Vietnam and elsewhere in East Asia and to make suggestions on how these may be overcome.
Prudential Vietnam and the Global Aging Institute (GAI) organized the conference, attended by representatives from the United Nations Population Fund and the Ministry of Labor, Invalids and Social Affairs (MoLISA).
Mr. Richard Jackson, President of GAI, told the conference of the results of a survey on the challenges posed by retirement in East Asia. Respondents included existing main earners and retirement pension recipients and the research asked respondents to talk about their general attitudes towards retirement and their own retirement expectations or experience. It was conducted in ten countries and territories in East Asia: Vietnam, the Philippines, Indonesia, Malaysia, China, Thailand, Singapore, South Korea, Taiwan and Hong Kong.
The research found that the majority of Vietnamese respondents said that they are greatly concerned about “Being Poor and in Need of Money” when they retire. Sixty-two per cent of Vietnamese respondents said that ideally the government is most responsible for providing income to retirees.
Mr. Phung Dac Loc, Secretary of the Association of Vietnam Insurers (AVI), said that in Vietnam there are 10 million people with social insurance and 2.3 million receiving pensions, which indicates that Vietnam’s social insurance fund will be inadequate by 2032. Moreover, Vietnam has a policy of encouraging people to only have two children, which will result in its population structure becoming old quite quickly and young people will have to work harder to provide for the retirement needs of their older compatriots.
Largely agreeing with Mr. Loc, Ms. Tran Thi Thuy Nga, Director of the Department of Social Insurance at MoLISA, said there are 11 million Vietnamese covered by social insurance but most are in the formal employment sector and take out voluntary social insurance. As Vietnam's population ages there are insufficient numbers of people looking to self-finance their retirement.
Ms. Ritsu Nacken, UNFPA Deputy Representative, said that Vietnam has had an aging population since 2011. The proportion of old people increased to 10.5 per cent in 2014 and will reach 23 per cent in 2040. One-fifth of elderly people live below the poverty line and more than one-third are still working in agriculture or the informal employment sector with unstable incomes.
The GAI research suggests reform to improve participation rates in social insurance by improving the adequacy of the State pension system and educating the public about the critical role of financial services in retirement savings. Forty-three per cent of Vietnamese respondents to the survey said they trust financial services companies to help them prepare for retirement.
Regarding the risk to customers from financial services for retirement, Mr. Wilf Blackburn, Chief Executive Officer of Prudential Vietnam, told VET that in Vietnam funds from policies are managed inside the country and are therefore unaffected by exchange rate fluctuations. Prudential Vietnam primarily uses such funds to purchase Vietnamese Government bonds, so the possibility of losing money is extremely low.