Giang, Thanh Long (2005): Pension Liabilities and Generational Relations: The Case of Vietnam. Published in: Oxford Institute of Ageing (OIA) , Vol. Workin, (March 2006)
Download (166kB) | Preview
In the next fifty years, according to the United Nations Population Prospect (2004), an aging population is expected in Vietnam. The operation of a pay-as-you-go defined benefit pension scheme will inevitably elevate pension liabilities. These liabilities, in turn, threaten the financial sustainability of the scheme, and affect generational relations. This paper estimates the size of pension liabilities of the current pension scheme in Vietnam, and analyzes generational relations under various economic scenarios. Pension liabilities are considered by a closed-group approach. The estimated results show that pension liabilities account for a small part of 2002 GDP, and this is partially explained by two primary factors: (i) the method of estimation currently employed by the scheme, and (ii) the fact that currently the scheme covers only a small portion of the total population and labour force. It is, however, obvious that the government will have to pay existing pension liabilities, which will affect generational relations in the longer term, particularly from an economic point of view. Whether the impacts on generational relations will be serious or not depends upon payment settings and reforms of the scheme.
|Item Type:||MPRA Paper|
|Institution:||Oxford Institute of Ageing, the University of Oxford|
|Original Title:||Pension Liabilities and Generational Relations: The Case of Vietnam|
|Keywords:||aging; inter (intra)generational relations; pension liabilities/debts; Vietnam|
|Subjects:||H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions|
|Depositing User:||Thanh Long Giang|
|Date Deposited:||30. Nov 2006|
|Last Modified:||12. Feb 2013 03:56|
Bravo, J., and Uthoff, A. 1999. “Transitional Costs and Demographic Factors in Shifting from Unfunded to Funded Pension Scheme in Latin America”, Development Finance Unit, Latin American and Caribbean Demographic Center, Chile. Committee for Population, Family and Children, Vietnam (CPFC), and ORC Marco. 2003. Vietnam Demographic and Health Survey 2002 (VHDHS 2002). Calverton, Maryland, USA: Committee for Population, Family and Children, and ORC Marco. Franco, D., Marino, M. R., and Zotteri, S. 2004. “Pension Expenditure Projections, Pension Liabilities, and European Union Fiscal Rules”. Paper presented in the International Workshop on the Balance Sheet of Social Security Pensions, Hitotsubashi University, Tokyo, 1-2 November 2004. General Statistical Office, Vietnam (GSO). 2002. Population Projections for the Whole Country, Geographic Regions, and 61 Provinces/Cities: Vietnam, 1999-2024, Project VIE/97/P14. Giang, Thanh Long. 2004a. “Application of Notional Defined-Contribution to the Pension Scheme in Vietnam”, Review of Social Insurance, 4/2004, Vietnam. (in Vietnamese). Giang, Thanh Long. 2004b. “The Pension Scheme in Vietnam: Current Status and Challenges in an Aging Society”, Vietnam Development Forum (VDF) Discussion Paper No.2 (E). Giang, Thanh Long. 2005. “Managerial and Regulatory Issues of the Public Pension Scheme in Vietnam”. Paper submitted to “The 3rd Meeting on Pension, Risk, and Saving” of the Applied Economics Department of University Paris-Dauphine on April 8, 2005. Hagemann, R. P., and Nicolleti, G. 1989. “Aging Populations: Economic Effects and Implications for Public Finance”, OECD Department of Economics and Statistics Working Paper No.61. Holzmann, R., Arthur, I.W.M., and Sinn, Y. 2000. “Pension Systems in East Asia and the Pacific: Challenges and Opportunities”, Social Protection Discussion Paper Series No.0014, the World Bank. Holzmann, R., Palacios, R., and Zviniene, A. 2001. “Implicit Pension Debt: Issues, Measurement, and Scope in the International Perspectives”, Social Protection Department, The World Bank. ________. 2004. “Implicit Pension Debt: Issues, Measurement, and Scope in the International Perspectives”, Social Protection Department, Working Paper No.0403, the World Bank. International Labor Organization (ILO). 1998. Vietnam: Report to the Government on Social Protection Development and Training-Actuarial Valuation of the Vietnam Social Security Scheme, VIE24V3.598, Geneva. Kane, C., and Palacios, R. 1996. “The Implicit Pension Debt”, Finance & Development, June 1996. Kunieda, S., (2002). “Japanese Pension Reform: Can We Get Out of Inter-generational Exploitation?” in Pension Reforms in Asian Countries, Proceedings of the International Symposium, Hitotsubashi University, Japan. p.23-63. Lopez, A, D., Salomon, J., Ahmad, O., Murray, C.J.L., and Mafat, D. 2000. “Life Table for 191 Countries: Data, Methods, and Results”. The World Health Organization. Nguyen, Thi Hoai Thu. 2004. “Debate on Difficulties of Social Insurance Performance”. Paper reported in the National Assembly Workshop on Social Affairs, October 24, 2004, Hanoi. (in Vietnamese). (Van der) Noord, P., and Herd, R. 1993. “Pension Liabilities in the Seven Major Economies”. OECD Economics Department Working Paper 142. ________. 1994. “Estimating Pension Liabilities: A Methodological Framework”, OECD Economic Studies No.23, Winter 1994, p. 131-166. Plamondon, P., Drouin, A., Binet, G., Cichon, M., McGillivray, W. B., Bédard, M., and Perez-Montas, H. 2002. Actual Practice in Social Security. International Labor Organization (ILO) & International Social Security Association (ISSA). Roseveare, D., Leibfritz, W., Fore, D., and Wurzel, E. 1996. “Aging Populations, Pension Systems and Government Budgets: Simulation for 20 OECD Countries”. OECD Economics Department Working Paper 168. Vietnam Social Insurance (VSI). 2004. “Estimating the Social Insurance Fund in Vietnam”. VSI Project Paper, Hanoi. (in Vietnamese). World Bank. 1994. Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth. Oxford University Press.