INTRODUCTION
CHAPTER 2 OVERVIEW OF INSURANCE BUSINESS: THE POLICY AND PENSION POLICY
2.2 Pension policy and its features
2.4 Rights of client toward pension policy
CHAPTER 3 REVIEW THE CLIENT’S RIGHT OF TERMINATION AND WITHDRAWAL OF MONEY IN ADVANDE
3.1.1 Analysis of the current unsound regulations
3.2 Review of the right to withdrawal money in advance
3.2.1 Analysis of the current unsound regulations
CHAPTER 4 REVIEW TAX INCENTIVE REGULATIONS APPLIED FOR CORPORATE AND EMPLOYEE CLIENT BUYING PENSION PRODUCT
4.1 Analysis of the current unsound regulations – the need to encourage voluntary pension policy
CHAPTER 5 PROPOSAL ON LEGAL REFORM TO ENHANCE CLIENT RIGHTS AND TAX INCENTIVES FOR PENSION BUSINESS
5.2 Rights of withdrawal money in advance
The swift rise in the global aging population is significantly impacting the economic, social, and political landscapes of nations Vietnam stands out as one of the countries experiencing the fastest aging rate, ranking first in Asia and seventh worldwide.
Vietnam has experienced significant economic growth over the past two decades, greatly improving the living standards of its citizens and fostering healthier lifestyles This advancement has resulted in an increase in life expectancy, rising from 69.2 years in 2001 to 73.2 years in 2014, with projections indicating it could reach 80.4 years by 2050.
Between 1990 and 2015, the population of individuals aged 60 and above nearly doubled, increasing from approximately 5.6 million to 9.7 million, with projections indicating a tripling of this demographic over the next two decades In contrast, there has been a significant decline in the number of newborns and children under 15 years old The accompanying graph illustrates the changing proportions of these age groups from 1990 to 2025.
Graph 1.1: Vietnam's life expectancy trend from 2001 to
(Source: World Bank, UN, BMI, 2014)
As it can be seen, Vietnam has experienced the demographic transition from a young to an aging population within the last 25 years
Despite an increase in life expectancy, many elderly individuals in Vietnam face significant health and financial challenges The Vietnam Association of the Elderly reports that 73% lack social insurance or pension benefits, forcing them to continue working or depend on their adult children Unfortunately, this reliance is often insufficient to prevent old-age poverty, especially in a country still classified as lower middle-income In 2014, the average income per capita was $2,052, and while the rate of extreme poverty has decreased to 3%, a considerable portion of the population still lives below the national poverty line.
In 2014, the World Bank reported that Vietnam's poverty rate was 13.5 percent, highlighting a disparity between economic growth and per-capita income levels amidst a significant demographic transition Unlike the Western world, which developed before aging, Vietnam is facing the challenge of an aging population while still in the development phase To tackle these issues, Vietnam is implementing reforms aimed at addressing the complexities arising from this unique demographic shift.
1 http://www.worldbank.org/en/news/press-release/2016/02/23/new-report-lays-out-path-for-vietnam-to- reach-upper-middle-income-status-in-20-years
Graph 1.2: Vietnam's age proportion trend from 1990 to 2025 (%) pension systems that help the population cope with the risk of poverty in old age
This exposes an alert and also a challenge to the national social welfare system in general
Social welfare systems primarily aim to ensure consumption stability by safeguarding individuals from sudden income loss and depleted savings, while also providing protection against the risk of poverty in old age.
Vietnam's insurance system comprises three key components: (i) a mandatory public-funded pension fund known as Social Security, which serves as the first pillar, (ii) state-controlled supplementary pension funds, and (iii) privately managed voluntary pension funds, referred to as Pension, which is recognized as the third pillar This structure aligns with international standards for social security systems.
Currently, MOLISA has completed the process of studying and drafting the draft of the pilot project on supplementary pension policy as follows (Figure 1)
Pensions and supplementary pensions represent a crucial source of income for individuals during retirement Each person has their own retirement account, where the assets accumulated are solely owned by the insured individual, granting them access to these funds upon reaching retirement age These retirement plans typically operate on a Defined Contribution (DC) basis However, pensions and supplementary pensions differ in several key aspects.
Principle A life insurance product provided by insurers
Contribution Voluntary Voluntary (pre-stage) and mandatory (post-stage)
Subject Employee or group employee Employee and employer participating in Social Security
Payment Depend on the will of individual or employer
Contribution rate specified in labor contract/ collective agreement
Benefit Besides the protection benefit, insurers commit a minimum interest rate and the interest share of insurers’ profit, if any
All profits from the investment will be paid to the participant
Limitation in 3 cases: (i) reduced working capacity at 61% or more; (ii) suffers a dangerous disease; (iii) citizen of Vietnam is permitted abroad residence legally by competent authority of such country
All paid contribution of employee will be returned
Management Insurers and Management fund companies
Management fund companies, Custodian bank, and other financial intermediation
Regulation Law on insurance business and its guidance
Labor Code, Law on social insurance
Tax policy Tax incentive for employee and employer
MOLISA’s suggestion, tax incentive of Supplementary pension will be higher than the one of Pension
Many countries are shifting from a single-pillar pension system to a multi-pillar approach due to the limitations of relying solely on one pillar Vietnam's pension policy exemplifies this trend, showcasing the benefits of a diversified pension framework.
Vietnam's primary pension system is the state-run social insurance scheme, which is predominantly mandatory This system requires a total contribution of 26% of the monthly salary, with employers covering 18% and employees contributing 8% However, the reliance on a single-pillar system presents certain limitations in the country.
The participation rate in the mandatory social system has been notably low, with only 10.6 million contributors reported in 2013, primarily from state-run organizations Additionally, contributions to the voluntary pension system remain limited, highlighting the need for increased engagement in social welfare programs.
Secondly, the fund deficit can be attributed to the lack of capacity for management and implementation of the fund
Apart from the above, the current Social Insurance system also has the following limitations:
The annual pension benefit from Social welfare system is capped at 75%*20 months of basic salary (currently about 21 million) per capita which is insufficient to maintain employees’ lifestyle after retirement
Pension benefit from Social Welfare system is not inflation-protected Therefore, this amount will not be sufficient to maintain the lifestyle in the period of high inflation
Vietnam has a low official retirement age, set at 60 for men and 55 for women, yet approximately 50% of employees choose to retire early According to the Social Insurance Department, the trend of early retirement has led to a rapid increase in the number of individuals receiving payouts, outpacing the growth of contributors.
217 contributors for 1 retiree In 2010, this ratio fell to as low as 10.7/1 (see the trend is shown in the Figure 3 below) and now the ratio plummet to 8.13:1:
According to MOLISA projections, if current trends continue, by 2034, the number of retirees will match the number of social insurance contributors, posing a significant risk to the balance of the social insurance fund's cash flow Mr Tran Huy Lieu, Deputy Head of the Social Insurance Department, warns that "sooner or later, the social insurance fund will fly off balance."
To address the challenges in Vietnam's social insurance system, reforms are underway, including raising the retirement age and increasing contribution rates for both employers and employees However, these measures are only temporary fixes and do not effectively resolve underlying systemic issues Consequently, the Vietnamese government is exploring alternative pension funds to strengthen the existing social insurance fund.
4 http://e.vnexpress.net/news/news/half-of-vietnam-s-workforce-opts-for-early-retirement-threatening- pension-fund-3490583.html
Chart 2.1: Ratio of contributors per retiree
In response to current challenges, the Government is reforming the pension funding system to ensure its long-term sustainability This includes launching a roadmap that promotes voluntary pension insurance, encouraging individuals to prepare for their retirement The Ministry of Finance (MOF) and the Ministry of Labor, Invalids and Social Affairs (MOLISA) have developed two parallel pension systems: the Supplementary Pension and Pension Product, aimed at enhancing retirement security for citizens.
OVERVIEW INSURANCE BUSINESS: THE POLICY AND PENSION
P ROCEDURE OF LAUNCHING PRODUCT
2.4 Rights of client toward pension policy
CHAPTER 3 REVIEW THE CLIENT’S RIGHT OF TERMINATION AND WITHDRAWAL OF MONEY IN ADVANDE
3.1.1 Analysis of the current unsound regulations
3.2 Review of the right to withdrawal money in advance
3.2.1 Analysis of the current unsound regulations
CHAPTER 4 REVIEW TAX INCENTIVE REGULATIONS APPLIED FOR CORPORATE AND EMPLOYEE CLIENT BUYING PENSION PRODUCT
4.1 Analysis of the current unsound regulations – the need to encourage voluntary pension policy
CHAPTER 5 PROPOSAL ON LEGAL REFORM TO ENHANCE CLIENT RIGHTS AND TAX INCENTIVES FOR PENSION BUSINESS
5.2 Rights of withdrawal money in advance
The swift rise in the aging population worldwide has significantly impacted the economic, social, and political landscapes of nations Vietnam is recognized as one of the fastest-aging countries, ranking first in Asia and seventh globally.
Vietnam's impressive economic growth over the past two decades has significantly improved the living standards of its citizens, fostering healthier lifestyles As a result, life expectancy has risen from 69.2 years in 2001 to 73.2 years in 2014, with projections indicating a further increase to 80.4 years by 2050.
Between 1990 and 2015, the population of individuals aged 60 and above nearly doubled, increasing from approximately 5.6 million to 9.7 million, and is projected to triple over the next two decades In contrast, the number of newborns and children under 15 has seen a significant decline The accompanying graph illustrates the changing proportions of these age groups from 1990 to 2025.
Graph 1.1: Vietnam's life expectancy trend from 2001 to
(Source: World Bank, UN, BMI, 2014)
As it can be seen, Vietnam has experienced the demographic transition from a young to an aging population within the last 25 years
Despite rising life expectancy, many elderly individuals in Vietnam face significant health and financial challenges, with 73% lacking social insurance or pension benefits, according to the Vietnam Association of the Elderly This situation forces them to continue working or depend on their adult children, which is insufficient to combat old-age poverty As a lower middle-income country, Vietnam's average per capita income was $2,052 in 2014, and while the extreme poverty rate has decreased to 3%, a considerable portion of the population still lives below the national poverty line.
In 2014, the World Bank reported that Vietnam's poverty rate stood at 13.5 percent, highlighting a disparity between economic growth and income per capita in relation to the country's demographic transition Unlike the Western world, which developed before experiencing aging populations, Vietnam faces the unique challenge of aging while still in the development phase To tackle these issues, Vietnam is implementing reforms aimed at addressing the complexities of this demographic shift.
1 http://www.worldbank.org/en/news/press-release/2016/02/23/new-report-lays-out-path-for-vietnam-to- reach-upper-middle-income-status-in-20-years
Graph 1.2: Vietnam's age proportion trend from 1990 to 2025 (%) pension systems that help the population cope with the risk of poverty in old age
This exposes an alert and also a challenge to the national social welfare system in general
Social welfare systems primarily aim to ensure consumption smoothing, safeguarding individuals from sudden drops in consumption due to income loss or depleted savings, while also providing protection against the risk of poverty in old age.
Vietnam's current insurance system comprises three main components: (i) the mandatory public-funded pension fund, known as Social Security, which serves as the first pillar; (ii) state-controlled supplementary pension funds; and (iii) privately managed voluntary pension funds, referred to as Pension, representing the third pillar This structure aligns with international standards for social security systems.
Currently, MOLISA has completed the process of studying and drafting the draft of the pilot project on supplementary pension policy as follows (Figure 1)
Pensions and supplementary pensions serve as essential income sources during retirement, with each individual maintaining a unique retirement account The assets accumulated in these accounts belong to the insured person, who has the right to access them upon reaching retirement age Both types of insurance operate on a Defined Contribution (DC) payment model, yet they exhibit several key differences.
Principle A life insurance product provided by insurers
Contribution Voluntary Voluntary (pre-stage) and mandatory (post-stage)
Subject Employee or group employee Employee and employer participating in Social Security
Payment Depend on the will of individual or employer
Contribution rate specified in labor contract/ collective agreement
Benefit Besides the protection benefit, insurers commit a minimum interest rate and the interest share of insurers’ profit, if any
All profits from the investment will be paid to the participant
Limitation in 3 cases: (i) reduced working capacity at 61% or more; (ii) suffers a dangerous disease; (iii) citizen of Vietnam is permitted abroad residence legally by competent authority of such country
All paid contribution of employee will be returned
Management Insurers and Management fund companies
Management fund companies, Custodian bank, and other financial intermediation
Regulation Law on insurance business and its guidance
Labor Code, Law on social insurance
Tax policy Tax incentive for employee and employer
MOLISA’s suggestion, tax incentive of Supplementary pension will be higher than the one of Pension
Many countries are shifting from single-pillar to multi-pillar pension systems due to the limitations of relying solely on one pillar Vietnam's pension policy exemplifies this global trend towards more diversified retirement funding.
Vietnam's primary pension system is the state-run social insurance scheme, which is predominantly mandatory This system requires a total contribution of 26% of the monthly salary, with employers covering 18% and employees contributing 8% However, the system is limited by its single-pillar structure.
The participation rate in the mandatory social system has been notably slow, with only 10.6 million contributors reported by The Social Welfare system in 2013 This figure predominantly reflects contributions from state-run organizations, highlighting the limited engagement with the voluntary pension system.
Secondly, the fund deficit can be attributed to the lack of capacity for management and implementation of the fund
Apart from the above, the current Social Insurance system also has the following limitations:
The annual pension benefit from Social welfare system is capped at 75%*20 months of basic salary (currently about 21 million) per capita which is insufficient to maintain employees’ lifestyle after retirement
Pension benefit from Social Welfare system is not inflation-protected Therefore, this amount will not be sufficient to maintain the lifestyle in the period of high inflation
Vietnam has a low official retirement age, set at 60 for men and 55 for women, yet many employees choose to retire early As reported by the Social Insurance Department on October 26, 2015, the number of individuals receiving retirement payouts is growing at a faster rate than those contributing to the system.
217 contributors for 1 retiree In 2010, this ratio fell to as low as 10.7/1 (see the trend is shown in the Figure 3 below) and now the ratio plummet to 8.13:1:
MOLISA projects that by 2034, the number of retirees will match the number of social insurance contributors, posing a significant risk to the financial balance of the social insurance fund Mr Tran Huy Lieu, Deputy Head of the Social Insurance Department, warns that this trend could lead to an imbalance in the fund's cash inflow and outflow, stating, "Sooner or later, the social insurance fund will fly off balance."
To address the challenges of the current social insurance system in Vietnam, reforms have been initiated, such as raising the retirement age and increasing the contribution rates for both employers and employees However, these adjustments are only temporary fixes and do not resolve the underlying systemic issues Consequently, the Vietnamese government is exploring alternative pension funds to strengthen the social insurance fund for long-term sustainability.
4 http://e.vnexpress.net/news/news/half-of-vietnam-s-workforce-opts-for-early-retirement-threatening- pension-fund-3490583.html
Chart 2.1: Ratio of contributors per retiree
In response to current challenges, the Government is reforming the pension funding system to ensure its long-term sustainability A new roadmap has been introduced to promote voluntary pension insurance, encouraging individuals to prepare for their retirement Consequently, the Ministry of Finance (MOF) and the Ministry of Labor, Invalids and Social Affairs (MOLISA) have developed two parallel pension systems: the Supplementary Pension and the Pension Product.
R IGHTS OF P OLICY OWNER ( CLIENT ) TOWARD POLICY
Insurance laws in various jurisdictions mandate that insurers incorporate specific standard provisions in individual life insurance policies to safeguard policy owners and beneficiaries Key provisions include the free-look provision, entire contract provision, grace period provision, reinstatement provision, policy withdrawals, and nonforfeiture provision.
While the exact phrasing of insurance provisions may differ across policies, insurers, and jurisdictions, they generally share similar principles This includes Vietnam's life insurance contracts, which are also governed by these overarching regulations.
A typical individual life insurance policy includes a free-look provision, allowing the policy owner a specified time frame to cancel the policy after delivery and receive a refund This free-look period starts from the delivery date, not the issue date, and insurance coverage remains active during this time or until the policy owner decides to reject the policy, whichever comes first.
The entire contract provision outlines the specific documents that form the agreement between the insurance company and the policy owner, ensuring that only written terms are recognized and preventing oral statements from modifying the policy This provision serves to protect both policy owners and insurers from potential misunderstandings about the contractual terms.
The entire contract provision's wording differs based on whether the policy is classified as a closed or open contract A closed contract includes only the terms explicitly printed in or attached to the contract, with most individual life insurance policies falling into this category Typically, the entire contract provision in these policies specifies that the complete contract comprises the policy itself.
The contract provision includes the main policy, any attached riders, and a copy of the insurance application, ensuring that policyholders have complete access to all terms of the agreement.
The grace period provision allows policyholders a specified time after the renewal premium due date to pay their premium without losing coverage During this grace period, the insurance contract remains valid even if the premium is unpaid If the insured passes away during this time, the insurer will pay the death benefit to the beneficiary, although any unpaid renewal premium will typically be deducted from this amount.
Individual life insurance policies often feature a reinstatement provision that outlines the requirements for policyowners to restore a lapsed policy Reinstatement allows insurers to reactivate a policy that has been terminated due to nonpayment of premiums or has been maintained under nonforfeiture options like extended term or reduced paid-up insurance However, most insurers do not allow reinstatement if the policy has been surrendered for its cash value Upon reinstatement, the original policy is reinstated without the issuance of a new one.
A policy withdrawal provision, commonly known as a partial surrender provision, allows policyholders to withdraw cash from their policy's cash value without incurring interest or repayment obligations While the cash value decreases by the withdrawal amount, insurers may impose administrative fees and limit the number of withdrawals permitted annually It's important to note that such withdrawals can also impact the policy's death benefit.
The nonforfeiture provision outlines the options available to cash value policyholders when their policy lapses or is surrendered Typically, these provisions allow policyowners to choose from various nonforfeiture options if a renewal premium remains unpaid after the grace period The available options include cash payment, reduced paid-up insurance, extended term insurance, and the automatic premium loan option.
The cash payment nonforfeiture option allows policyowners to surrender their cash value policy and receive a lump-sum payment of the cash surrender value if they stop making premium payments Upon surrendering the policy, the insurer deducts any applicable surrender charges, which are fees imposed when a cash value insurance policy is surrendered.
REVIEW THE CLIENT’S RIGHT OF TERMINATION/ CANCELLATION AND
R EVIEW OF T ERMINATION / C ANCELLATION RIGHTS
3.1.1 Analysis of the current unsound regulations
3.2 Review of the right to withdrawal money in advance
3.2.1 Analysis of the current unsound regulations
CHAPTER 4 REVIEW TAX INCENTIVE REGULATIONS APPLIED FOR CORPORATE AND EMPLOYEE CLIENT BUYING PENSION PRODUCT
4.1 Analysis of the current unsound regulations – the need to encourage voluntary pension policy
CHAPTER 5 PROPOSAL ON LEGAL REFORM TO ENHANCE CLIENT RIGHTS AND TAX INCENTIVES FOR PENSION BUSINESS
5.2 Rights of withdrawal money in advance
The swift rise in the aging population worldwide has significantly impacted the economic, social, and political landscapes of countries Vietnam stands out as one of the fastest-aging nations, ranking first in Asia and seventh globally.
Vietnam's impressive economic growth over the past two decades has significantly improved living standards and promoted healthier lifestyles among its citizens As a result, life expectancy has risen from 69.2 years in 2001 to 73.2 years in 2014, with projections indicating it could reach 80.4 years by 2050.
Between 1990 and 2015, the population of individuals aged 60 and older nearly doubled, increasing from approximately 5.6 million to around 9.7 million, with projections indicating that this number will triple over the next two decades In contrast, there has been a significant decline in the number of newborns and children under the age of 15 The accompanying graph illustrates the changing proportions of these age groups from 1990 to 2025.
Graph 1.1: Vietnam's life expectancy trend from 2001 to
(Source: World Bank, UN, BMI, 2014)
As it can be seen, Vietnam has experienced the demographic transition from a young to an aging population within the last 25 years
Despite rising life expectancy, many elderly individuals in Vietnam face significant health and financial challenges The Vietnam Association of the Elderly reports that 73% lack social insurance or pension benefits, forcing them to continue working or depend on their adult children Unfortunately, this reliance is insufficient to shield them from old-age poverty, especially as Vietnam remains a lower middle-income country In 2014, the average income per capita was $2,052, and while the extreme poverty rate has decreased to 3%, a substantial portion of the population still lives below the national poverty line.
In 2014, the World Bank reported that Vietnam's poverty line stood at 13.5 percent, highlighting a significant gap between economic growth and income per capita levels amid the country's demographic transition Unlike the Western world, which developed before aging, Vietnam faces the unique challenge of aging while still in the development phase To tackle the difficulties arising from this situation, Vietnam is actively implementing reforms aimed at addressing these challenges.
1 http://www.worldbank.org/en/news/press-release/2016/02/23/new-report-lays-out-path-for-vietnam-to- reach-upper-middle-income-status-in-20-years
Graph 1.2: Vietnam's age proportion trend from 1990 to 2025 (%) pension systems that help the population cope with the risk of poverty in old age
This exposes an alert and also a challenge to the national social welfare system in general
Social welfare systems primarily aim to ensure consumption stability by safeguarding individuals from sudden declines in consumption due to income loss or depleted savings, while also addressing the risk of poverty in old age.
The insurance system in Vietnam comprises three main components: the mandatory public-funded pension fund, known as Social Security, which serves as the first pillar; supplementary pension funds regulated by the state; and voluntary pension funds managed by private entities, referred to as Pension, which is recognized as the third pillar This structure aligns with international standards for social security systems.
Currently, MOLISA has completed the process of studying and drafting the draft of the pilot project on supplementary pension policy as follows (Figure 1)
Pensions and supplementary pensions represent a significant part of retirement income, with each individual maintaining a distinct retirement account The assets accumulated in these accounts are owned by the insured person, who can access them upon reaching retirement age While both types of insurance utilize a Defined Contribution (DC) payment structure, they differ in several key aspects.
Principle A life insurance product provided by insurers
Contribution Voluntary Voluntary (pre-stage) and mandatory (post-stage)
Subject Employee or group employee Employee and employer participating in Social Security
Payment Depend on the will of individual or employer
Contribution rate specified in labor contract/ collective agreement
Benefit Besides the protection benefit, insurers commit a minimum interest rate and the interest share of insurers’ profit, if any
All profits from the investment will be paid to the participant
Limitation in 3 cases: (i) reduced working capacity at 61% or more; (ii) suffers a dangerous disease; (iii) citizen of Vietnam is permitted abroad residence legally by competent authority of such country
All paid contribution of employee will be returned
Management Insurers and Management fund companies
Management fund companies, Custodian bank, and other financial intermediation
Regulation Law on insurance business and its guidance
Labor Code, Law on social insurance
Tax policy Tax incentive for employee and employer
MOLISA’s suggestion, tax incentive of Supplementary pension will be higher than the one of Pension
Many countries are shifting from a single-pillar pension system to a multi-pillar approach due to the limitations associated with relying solely on one pillar Vietnam's pension policy exemplifies this trend, highlighting the need for more robust and diverse retirement solutions.
Vietnam's primary pension system is the state-run social insurance scheme, which is predominantly mandatory This system requires a total contribution of 26% of the monthly salary, with employers covering 18% and employees contributing 8% However, the system's reliance on a single pillar presents certain limitations.
The participation rate in the mandatory social welfare system has been sluggish, with only 10.6 million contributors reported in 2013, primarily from state-run organizations This indicates a limited engagement with the voluntary pension system, highlighting the need for increased awareness and participation in broader social security initiatives.
Secondly, the fund deficit can be attributed to the lack of capacity for management and implementation of the fund
Apart from the above, the current Social Insurance system also has the following limitations:
The annual pension benefit from Social welfare system is capped at 75%*20 months of basic salary (currently about 21 million) per capita which is insufficient to maintain employees’ lifestyle after retirement
Pension benefit from Social Welfare system is not inflation-protected Therefore, this amount will not be sufficient to maintain the lifestyle in the period of high inflation
Despite Vietnam's relatively low official retirement age of 60 for men and 55 for women, around half of employees choose to retire early, according to the Social Insurance Department's meeting on October 26, 2015 This trend has led to a growing disparity, as the number of individuals receiving pension payouts is rising more rapidly than the number of contributors to the system.
217 contributors for 1 retiree In 2010, this ratio fell to as low as 10.7/1 (see the trend is shown in the Figure 3 below) and now the ratio plummet to 8.13:1:
According to projections by MOLISA, if current trends continue, by 2034 the number of retirees will equal the number of social insurance contributors, posing a significant risk to the financial balance of the social insurance fund Mr Tran Huy Lieu, Deputy Head of the Social Insurance Department, warns that this situation could lead to an imbalance in the fund's cash inflow and outflow, indicating that the social insurance fund may eventually face financial instability.
To address the challenges within Vietnam's social insurance system, reforms such as raising the retirement age and increasing contribution rates for both employers and employees have been implemented However, these measures serve as temporary fixes and do not effectively resolve the underlying systemic issues Consequently, the Vietnamese government is exploring alternative pension funds to strengthen the social insurance fund.
4 http://e.vnexpress.net/news/news/half-of-vietnam-s-workforce-opts-for-early-retirement-threatening- pension-fund-3490583.html
Chart 2.1: Ratio of contributors per retiree
In response to current challenges, the Government is reforming the pension funding system to ensure its long-term sustainability The State has introduced a roadmap to promote voluntary pension insurance, encouraging individuals to prepare for their retirement Consequently, the Ministry of Finance (MOF) and the Ministry of Labor, Invalids, and Social Affairs (MOLISA) have developed two parallel pension systems: the Supplementary Pension and Pension Product.